Will California Tax Biden’s Student Debt Relief?

Remind me how this Beatles song goes…

If you’re too cold, I’ll tax the heat

If your debt cleared, I’ll tax the relief

Okay, maybe that’s not entirely accurate, but it’s a pretty apt description of the legal conundrum the state of California and up to 1.3 million indebted residents are facing. currently facing.

Remember when President Biden said his administration would forgive up to $20,000 per person in student debt? It turns out that there is a possible trap. Mikhail ZinshteynCalMatters higher education reporter, breaks it down:

It’s unclear whether current state law requires Californians to receive $10,000 or $20,000 in debt forgiveness to pay income tax on that offset debt. Whatever the answer, California lawmakers are promising that no one will pay a dime at tax time next spring.

That’s according to Senate Speaker Pro Tem Toni Atkins of San Diego and Assembly Speaker Anthony Rendon of Lakewood — the Democratic leaders of the Legislative Assembly — in a public comment Friday in response to a Los Angeles Times article. .

• Of common tweet: “Rest assured, one way or another, California will not tax federal student debt relief.”

This reflects a wish from the White House, which said in a fact sheet that borrowers will not pay federal taxes on loans they no longer owe.

But some states’ tax codes, which treat debt relief as giving away a lot of money, are not the same. In California, only the elimination of certain types of federal debt can be exempt from tax. (For fans of legalese, we’re talking about debt forgiveness specified in Title 20, Section 1098e of the US Code).

The US Department of Education would not tell CalMatters whether the debt cancellation plan will be executed through Section 1098e. Instead, a department spokesperson said he read the Biden administration’s legal memo defending the debt cancellation plan. CalMatters asked attorneys for the California Franchise Tax Board to review this federal memo on Thursday, but we have yet to hear back.

The result: For a single childless single earning $50,000, imposing $10,000 in debt forgiveness would increase that person’s income tax bill by about $800, according to this tax commission’s calculator.

Whatever action Atkins and Rendon take, they will need Gov. Gavin Newsom’s signature, Rendon’s spokeswoman Katie Talbot wrote in an email late Friday. And state lawmakers must act quickly. If debt forgiveness is taxable now, a change in the law will need to be in place before Californians begin filing their 2022 tax returns.

More from Mikhail: A state pilot program that offered $2,500 grants to help people who lost their jobs during the pandemic learn new skills is being expanded. The state hopes to send checks to 190,000 low-income Californians, with half of the money earmarked for parents of young children.

The toll of the coronavirus: On Thursday, California had 10,329,995 confirmed cases (+0.01% compared to the previous day) and 94,558 deaths (+0.2% compared to the previous day)according to state data now updated only twice a week on Tuesdays and Fridays. CalMatters also tracks coronavirus hospitalizations by county.

California administered 79,697,832 vaccine dosesand 72.1% of eligible Californians are fully vaccinated.

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Where there is fire, there is smoke

Residents of Chico received good news and bad news this weekend, thanks to their local fire department.

• The good news: “There are currently no major wildfires near Chico or in Butte County.”

The bad news: All the smoke in the air — thick enough to prompt firefighters to clear things up to panicked residents — was billowing from wildfires burning elsewhere in northern California and southern Oregon.

Mosquito fire perhaps deserves most of the blame. Currently the biggest inferno in the state, the fire jumped the American River’s Middle Fork this weekend on its blistering path through the Tahoe National Forest. The mushroom-cloud fire created dangerous air quality conditions in the Sierra foothills and sent smoke pouring into the Lake Tahoe basin, even as onshore winds promised a light temporary respite in Sacramento.

All that ashy air sparked a series of new public health warnings on Saturday, including one from California Department of Public Health director Dr. Tomás Aragón.

• Aragon: “Vulnerable people, especially children, the elderly and pregnant women should reduce their outdoor activities and stay indoors, if possible.”

On Sunday, the Mosquito Fire was only 10% contained, according to Cal Fire. Firefighters had better luck containing the raging Fairview Fire near Hemet in Riverside County, thanks to rain from Tropical Storm Kay.

Feel the heat: Kay also helped break the back of a region-wide heat wave that broke all-time temperature records in California communities and left Mount Shasta almost entirely snow-free for the second consecutive summer. .

On Friday, Governor Gavin Newsom signed a bill that will make California the first state to create an extreme heat warning system. Imagine something like the classified categories the National Oceanic and Atmospheric Administration issues for hurricanes, only when it’s really, dangerously hot outside.

2
New developments in LA mayor’s campaign

On Friday night, someone broke into the home of Rep. Karen Bass, the favorite in the Los Angeles mayoral race, and allegedly took two guns.

Crime and disorder have dominated the debate in the Los Angeles mayoral campaign, but so far it has remained a more abstract point for the candidates. Bass’ opponent, real estate developer Rick Caruso, presented himself as a sensible businessman who won’t let progressive ideology get in the way of cracking down on crime.

If elected, Bass would become the first woman to serve as mayor of Los Angeles. She beat Caruso in the primary by seven points, although Caruso spent over $30 million.

The burglary did not appear to interrupt Bass’ weekend campaign plans — she visited Democratic activists in the Valley and San Pedro on Saturday. But the news completes a terrible, horrible, not good, very bad week for Bass.

On Wednesday, the Los Angeles Times reported that details about the tuition-free master’s degree Bass received from the University of Southern California now play a ‘critical’ role in a federal fraud case against the former supervisor. of LA County, Mark Ridley-Thomas and one of the university’s former deans.

If that’s bad news for Bass, it’s not a big development for USC either. Among other scandals that have clouded the university’s former reputation: a $1.1 billion sex abuse settlement, a party-loving medical school dean, a pivotal role in an admissions bribery case at University.

Now, as the Los Angeles mayor’s campaign grows increasingly bitter, mere association with the school has become a political liability, the Los Angeles Times wrote on Sunday. Caruso denounced Bass’ scholarship as “corruption…pure and simple.” Bass’s campaign fired back, noting that as chairman of the school’s board of trustees between 2018 and this year, Caruso helped achieve the billion-dollar legal settlement.

• Gloria Molina, former Los Angeles County Supervisor: “It’s unfortunate that this is the backdrop for this political back and forth… But in the deepest issues of political corruption, (USC has) been at the heart of it all .

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Biggest bet yet

If you thought the 2020 proposal campaigns were a budget doozy — dominated as they were by the $200 million in spending by Uber, Lyft, and Doordash — the 2022 version is shaping up to be even more doozy.

Let’s take the two competing sports betting metrics first:

• The campaign supporting Prop. 26, which would allow in-person sports betting at tribal casinos and racetracks, has now raised $107 million while the “No” campaign has raised $42 million.
• Proponents of Proposition 27, which would green light online sports betting across the state, raised $173 million, while opponents raised $150 million.

Doing some quick math, that works out to nearly half a billion dollars for two props. For the perspective, it’s more than all the money raised on both sides of all proposal on the ballot in 2018 or 2016 or 2014 or…

And there are still 56 days until Election Day.

Not that money necessarily buys you love. On Sunday, the editorial board of the Los Angeles Times issued a double-edged no-approval, urging its readers to vote “no” on both measures, which it called “stupid” and motivated by naked greed.

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