Little-known tax break for wealthy helps low-income college students
Wealthy individuals and corporations have an opportunity to do good this year — while they do well, thanks to a new and little-known tax break.
Two laws by Senate President Pro Tem Kevin de León provide College Access Tax Credits for contributions to the popular Cal Grants program that helps low-income students.
These new tax credits are reserved for contributions to so-called Cal Grant B awards that help pay for books, housing and transportation while students attend community colleges or four-year schools.
Contributors in turn can use the credits to reduce their state and federal income tax bills. This year the tax credit is for 55% of the total donation and can be used on 2015 returns. The credit is for 50% for 2016 liabilities. People who made contributions in 2014 can claim a 60% credit.
The California contributions also are eligible to be claimed as itemized deductions on federal tax returns, the Internal Revenue Service said.
“The California dream requires a highly skilled workforce and a healthy middle class,” De León (D-Los Angeles) wrote last month in a letter to the Golden State’s 100 wealthiest individuals and 100 wealthiest corporations.
De León’s bills won final passage in late August with only one dissenting vote cast in both the state Senate and Assembly. Gov. Jerry Brown signed them into law a month later, giving the state treasurer little time to get the word out for the 2014 tax-filing season.
Contributions, so far, have been modest, at just over $6.3 million. But De León is counting on a network of tax experts to advise clients with large, looming tax bills to make gifts and save money, spokeswoman Claire Conlon said.
State officials predict that there will be plenty of future demand for the tax credits. “We expect the tax credit to do well next year,” said Drew Mendelson, a spokesman for the state treasurer’s office, which administers the program. “Even with the short time they were available this year, we saw a great deal of interest in them.”
Peevey love-fest
Michael Peevey, 76, the controversial former president of the powerful California Public Utilities Commission presided over his last meeting in December. It was an almost three-hour love-fest as dozens of friends and colleagues praised Peevey.
Turns out that much of the meeting was carefully orchestrated, according to an internal PUC memo from Public Information Office Director Terrie Prosper to staffers. Among the memo’s “To-Do” items was: “Reserve 30 seats in the front for those coming to speak about President Peevey’s tenure.”
The memo also ordered up a “dry run of song/video” honoring Peevey. Finally, Prosper instructed information officers to limit the access of news cameras and videographers to the back of the PUC auditorium while making sure that members of a private camera crew hired for the occasion “ARE allowed to move freely.”
Brown wasted no time picking a replacement for the departing Peevey. Within days of the Peevey salute, he appointed Commissioner Michael Picker of Sacramento as the PUC’s new president.
Twitter: @MarcLifsher
