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California Propositions 5 and 6, Repeal of Inheritance and Gift Tax Laws (June 1982)

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Propositions 5 and 6 were on the June 8, 1982 statewide primary ballot in California as initiated state statutes. Both were approved.

Propositions 5 and 6 covered must of the same territory but had different different sponsors and slight differences in intent and wording. Proposition 5 was the "Miller" and Proposition 6 was the "Roger" version.

Both propositions repealed the Inheritance and Gift Tax Laws that were current in California at the time Propositions 5 and 6 were on the ballot. Propositions 5 and 6 also prohibited the State of California from imposing any tax on gifts made, or property transferred by reason of deaths occurring on or after their effective date.

Additionally, under the federal government's estate tax laws, a taxpayer can reduce his or her tax liability, up to certain limits, by the amount of the taxpayer's state death tax liability. Propositions 5 and 6 required California to levy a California estate tax equal to the maximum federal credit allowable. The intended effect of this provision was to provide the state a portion of the estate taxes which would otherwise go to the federal government.

Proposition 6, unlike Proposition 5, included a provision that prohibited local governments from imposing inheritance and gift taxes. Proposition 6 also included a clause prohibiting the California State Legislature from changing any of its provisions in the absence of a statewide vote of California's electors.

Election results

Proposition 5

Proposition 5
ResultVotesPercentage
Approveda Yes 3,208,394 61.8%
No1,983,81838.2%

Proposition 6

Proposition 6
ResultVotesPercentage
Approveda Yes 3,300,547 64.4%
No1,838,12835.6%

Ballot summary

Proposition 5

Proposition 5's official ballot summary said:

"Repeals existing statutes governing gift and inheritance taxes. Prohibits imposition of gift or inheritance taxes. Reenacts state "pickup" tax on decedents' estates at rate set by schedule of credits for state death taxes under specified provisions of the United States Internal Revenue Code. Requires Legislature to provide for collection and administration of this tax. See analysis of Legislative Analyst in Ballot Pamphlet for discussion of effective date of this measure. Summary of Legislative Analyst's estimate of net state and local government fiscal impact: Reduce state inheritance and gift tax revenues by about $130 million in 1982-83, by about $365 million in 1983-84, and by higher amounts thereafter. Save state approximately $6 million annually in administrative costs. Under existing law, reductions in state revenue would result in corresponding reductions in amount of fiscal relief provided by state to local governments and schools."

Proposition 6

Proposition 6's official ballot summary said:

"Repeals existing statutes governing gift and inheritance taxes. Prohibits imposition of such taxes by state or local government. Reenacts state "pickup" tax on decedents' estates measured by maximum credit against federal estate taxes allowed by federal law and provides that combined estate tax liability to California and United States cannot exceed tax liability to United States for property located in California if state tax not imposed. Requires Legislature provide for collection and administration of this tax. See analysis of Legislative Analyst in Ballot Pamphlet for discussion of effective date of this measure. Summary of Legislative Analyst's estimate of net state and local government fiscal impact: Reduce state inheritance and gift tax revenues by about $130 million in 1982-83, by about $365 million in 1983-84, and by higher amounts thereafter. Save state approximately $6 million annually in administrative costs. Under existing law, reductions in state revenue would result in corresponding reductions in amount of fiscal relief provided by state to local governments and schools."

Fiscal impact

Proposition 5

The fiscal estimate provided by the California Legislative Analyst's Office said:

"State Revenue Loss. During the 1981-82 fiscal year the state will collect about $445 million from the inheritance tax, under existing law. Assuming this measure becomes effective in June of 1982, it would reduce state inheritance revenues by about $110 million in fiscal year 1982-83 and by $340 million in 1983-84. (The full impact of the measure, however, would not occur until fiscal year 1985-86, because there is a time lag between the date of death and when the resulting inheritance taxes are paid.)
In addition, by eliminating the state gift tax, this measure would reduce state gift tax revenues by about $20 million in 1982-83, $25 million in 1983-84, and increasing amounts thereafter. The eventual loss will depend on the effects which recent changes in federal law will have on gift giving and will probably be above $30 million annually.
In summary, the adoption of the measure would reduce state inheritance and gift tax revenues by about $130 million in 1982-83, by about $365 million in 1983-84, and by higher amounts thereafter.
Savings in State Administrative Costs. The State Controller estimates that this measure would save the state approximately $6 million annually in administrative costs, once the full impact is felt.
Reduction in State Aid to Local Governments. Under existing law (Chapter 282, Statutes of 1979) the reduction in State General Fund revenues caused by this measure would result in a corresponding reduction in the amount of fiscal relief provided by the state to local governments and schools, beginning in 1982-83.

Proposition 6

The fiscal estimate provided by the California Legislative Analyst's Office said:

"State Revenue Loss. During the 1981-82 fiscal year the state will collect about $445 million from the inheritance tax, under existing law. Assuming this measure becomes effective in June of 1982, it would reduce state inheritance tax revenues by about $110 million in fiscal year 1982-83, and by about $340 million in 1983-84. (The full impact of the measure would not occur until fiscal year 1985-86 because there is a time lag between the date of death and when the resulting inheritance taxes are paid.)
In addition, by eliminating the state gift tax, this measure would reduce state gift tax revenues by about $20 million in 1982-83, $25 million in 1983-84, and increasing amounts thereafter. The eventual loss will depend on the effects which recent changes in federal law will have on gift giving and will probably be above $30 million annually.
In summary, the adoption of the measure would reduce state inheritance and gift tax revenues by about $130 million in 1982-83, by about $365 million in 1983-84, and by higher amounts thereafter.
Savings in State Administrative Costs. The State Controller estimates that this measure would save the state approximately $6 million annually in administrative costs, once the full impact is felt.
Reduction in State Aid to Local Governments. Under existing law (Chapter 282, Statutes of 1979), the reduction in State General Fund revenues caused by this measure would result in a corresponding reduction in the amount of fiscal relief provided by the state to local governments and schools, beginning in 1982-83.

Path to the ballot

As initiated state statutes, Propositions 5 and 6 earned their spots on the ballot through the collection of signatures on petitions.

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