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Joint UFW-CMA bill turns growers’ $80 million tax break into tax credit for farm worker health coverage


 
11 a.m. Tuesday, April 22, in Sacramento  
Joint UFW-CMA bill turns growers’ $80 million tax break into tax credit for farm worker health coverage
 

A sales tax exemption for growers enacted as part of a state budget deal in 2001 and currently worth about $80 million would be converted into a tax credit for employers who provide health benefits for their farm workers under legislation jointly sponsored by the United Farm Workers and the California Medical Association.

Nearly 10 years to the day after Cesar Chavez’s death, more than 100 farm workers led by UFW President Arturo Rodriguez will join physicians and immediate past-CMA President John Whitelaw, M.D. inside the medical association’s Sacramento headquarters at 11 a.m. on Tuesday to announce introduction of the measure. (Chavez died on April 23, 1993.) The bill, AB 923, would redirect state resources to bolster medical care for some of California poorest workers–most of whom have no health coverage–without raising taxes.

AB 923’s authors, Assembly Speaker Herb Wesson (D-Los Angeles) and Assembly Majority Floor Leader Marco A. Firebaugh (D-South Gate), as well as state Board of Equalization Chair Carole Migden will lay out details of the bill at Tuesday’s event.

Under AB 923, the Board of Equalization, Employment Development Department and Franchise Tax Board would work together to convert the sales tax exemptions into farm worker health insurance tax credits. The three state agencies would estimate annual revenue from the repealed sales tax exemptions, receive and verify applications from growers who provide health benefits and calculate how much in tax credits each employer would receive.

AB 923 is revenue neutral and requires a simple majority vote. It will be heard in the Assembly Revenue and Taxation Committee on April 28.

Who:     More than 100 farm workers and UFW President Arturo Rodriguez, physicians and immediate past-CMA President John Whitelaw, M.D., Assembly Speaker Herb Wesson, Assembly Majority Floor Leader Marco A. Firebaugh,
state Board of Equalization Chair Carole Migden.

What:   Unveiling joint UFW-CMA-sponsored legislation to turn an $80 million sales tax break for growers into tax credits for employers who provide health benefits to their farm workers.

When:   11 a.m., Tuesday, April 22, 2003.

Where:  California Medical Association headquarters lobby, 1201 "J" St. (corner of 12th St.), Sacramento.
 
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California Medical Association: http://www.cmanet.org      
United Farm Workers of America: http://www.ufw.org


 
 
Facts about the Farm Worker Health Insurance Tax Credit

AB 923 (Wesson & Firebaugh)

Sponsored by the United Farm Workers
and the California Medical Association


Goal: health care for farm workers

Jointly sponsored by the United Farm Workers of America, AFL-CIO and the California Medical Association, AB 923, by Assembly Speaker Herb Wesson (D-Los Angeles) and Assembly Majority Floor Leader Marco A. Firebaugh (D-South Gate), would convert an $80 million-a-year sales tax credit for growers enacted as part of a 2001 state budget deal into a tax credit for employers who provide health benefits to their farm workers.

AB 923 would redirect state resources in tough financial times to bolster medical care for some of the poorest workers in California–most of whom have no health coverage–without raising taxes. It is revenue neutral and requires a simple majority vote.

The Farm Worker Health Insurance Tax Credit is aimed at encouraging growers to provide medical insurance for their farm workers. With today’s rising health insurance costs, this bill could mean the difference between agricultural employers continuing to provide insurance and deciding to discontinue coverage.

Objective: redirect state resources

AB 923 would repeal agricultural sales tax exemptions enacted as part of the 2001-2002 state budget and use the money saved to offer non-refundable income tax credits to growers who provide health insurance for their farm workers. Eligible employers include those who directly hire agricultural employees as well as farm labor contractors who employ field laborers and are used by growers. Covered farm workers are only those who work in the fields; administrative or support personnel are not included. Qualified health insurance plans are those with coverage at least as comprehensive as required to be provided under the Knox-Keene Health Care Service Plan Act (Chapter 2.2, Division 2 of the Health and Safety Code)‹substantial health coverage that pays for doctor and hospital expenses.

How AB 923 would work

· Effective January 1, 2004, the sales tax exemptions in the 2001-2002 budget (AB 426, Cardoza) would be repealed. These exemptions include those for farm equipment and machinery, timber harvesting equipment, thoroughbred horses, diesel fuel used in farming and liquefied petroleum gas (LPG) for use other than as a principal residence in an area not serviced by gas lines or mains. (The LPG exemption for principal residences would be retained since it is intended as an equity measure and residents serviced by gas lines do not pay sales tax on their natural gas purchases.)

· The state Board of Equalization (BOE) would annually estimate how much these sales tax exemptions are worth for the calendar year just past. That amount would be transmitted to the Employment Development Department (EDD). This number, minus EDD’s costs of administering the credit allocation process, would equal the total amount of money available for the tax credits. AB 923 would create a "floating tax credit," meaning the pot of money available for tax credits will never exceed the funds generated by the sales tax exemption.

· EDD, which maintains employment data needed to verify tax credit claims, would send notices and applications to all California growers during calendar year 2004 about availability of the health insurance tax credit starting in the 2004 tax year. Applications would solicit information EED needs to verify credit claims and allocate credits. Growers must submit tax credit applications to EDD by January 31 of each year. So claims for the 2004 tax year would be due by January 31, 2005.
  
· The amount of the tax credit would be determined by the number of people in the pool of farm workers provided health benefits by growers under qualifying insurance plans divided by the amount of money available from repeal of the sales tax exemption. Each employer making a claim would indicate the number of full-time equivalent farm workers for whom the grower provided qualifying health care coverage. (For example, health care coverage provided to three farm workers for half the year would equal 1.5 full-time equivalent farm worker employees.)

· EDD would calculate the amount of credits to which eligible growers are entitled. If growers submitted verified applications claiming payment of health care premiums for 40,000 farm workers, each credit would be worth approximately $2,000, based on roughly $80 million available from repeal of the sales tax exemptions this year. (No grower could claim tax credits that exceed his or her costs of providing the health insurance for which he or she is claiming the credits.)

· EDD would notify both the growers and the Franchise Tax Board (FTB) of how much each employer is eligible to claim. This notice would be mailed to the grower no later than February 28, with an electronic copy or magnetic tape listing going to FTB.

· Growers would claim Farm Worker Health Insurance Tax Credits on their 2004 tax forms, due by March 15, 2005 for corporations and April 15, 2005 for individuals. FTB would verify that employers claim the proper amounts.

Claims presented by growers must be signed under penalty of perjury. The filing of fraudulent claims would be punished as a tax crime and be subject to treble damages.