Will California Tax Biden’s Student Debt Relief?
Remind me how The Beatles song goesâ¦
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 â the Democratic leaders of the Legislative Assembly â in a public comment Friday in response to a article in the Los Angeles Times.
- 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 the tax codes in some states, who treat debt relief as giving away a lot of money, disagree. In California, only the elimination of certain types of federal debt can be exempt from tax. (For fans of legalese, we are talking about a discharge of debt specified in Title 20 article 1098th 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 to read the Biden administration report legal note 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 childless single person earning $50,000, imposing $10,000 in debt forgiveness would increase that person’s income tax bill by about $800, according to the calculator of this tax commission.
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 the 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.
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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 status data now updated only twice a week on Tuesdays and Fridays. CalMatters also tracks coronavirus hospitalizations by county.
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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 â thick enough to prompt firefighters to clear things up to panicked residents â 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 blooming cloud mushroom Blaze created hazardous air quality conditions in the Sierra foothills and sent smoke pouring into the Lake Tahoe basin, even as onshore winds promised a short 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. TomÃ¡s AragÃ³n.
- 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 an area-wide heatwave that scorched the all time temperature records in California communities and left Mount Shasta almost entirely without snow for the second consecutive summer.
On Friday, Governor Gavin Newsom signed a bill that will make California the first state to create a extreme heat warning system. Imagine something like classified categories that the National Oceanic and Atmospheric Administration issues for hurricanes, only when it’s really, dangerously hot outside.
New developments in LA mayor’s campaign
Crime and disorder dominated the debate in the very expensive Campaign for mayor of Los Angeles, but so far it has remained a more abstract point for the candidates. Bass’ opponent, real estate developer Rick Caruso, has portrayed himself as a no-nonsense businessman who won’t let progressive ideology get in the way crack down on crime.
The burglary did not appear to interrupt Bass’ weekend campaign plans â 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 of the tuition-free master’s bass received from the University of Southern California are now plays a âcriticalâ role in a federal fraudulent corruption case against former LA County Supervisor 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 once good reputation: A $1.1 billion settlement of sexual abusea dean of medical schoola central role in a college admission bribery case.
Now, as the Los Angeles mayoral campaign grows increasingly bitter, mere association with the school has become a political handicap, wrote the Los Angeles Times 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 .
Biggest bet yet
If you thought the 2020 proposal campaigns were a budget doozy â dominated as they were by the $200 million in spending by Uber, Lyft, and Doordash â the 2022 version is shaping up to be even more doozy.
Letâs 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 greenlight 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 orâ¦
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 published a double-barreled non-approvalurging his readers to vote “no” on both measures, which he called “crazy” and motivated by naked greed.
Which of the 2022 California ballot measures do you support or oppose?
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