Rob Babek, Tax & Business Services Partner, Op-Ed “Governor Would Pile Levies on Tax-Wracked Businesses” was featured in the Los Angeles Business Journal.
The following is a segment taken from Mr. Babek’s Op-Ed.
Gov. Jerry Brown’s tax plan unveiled earlier this month amounts to yet another tax on businesses – businesses that make jobs and contribute to our state’s long-term growth and competitiveness.
First, Brown went after California business owners by proposing a reduction in the tax credits that businesses had accumulated but were unable to use. Next, he suspended the use of net operating loss carryovers for all businesses and individuals with incomes over $300,000. Then he proposed a half-cent increase in the state sales tax and an additional 1 percent tax on individuals with incomes above $250,000 a year. California already has an additional 1 percent tax on an individual’s income over $1 million. The official name of that tax is the Mental Health Services Tax, but its nickname is the “Additional Tax on Millionaires.” This new proposed tax could be called the “Junior Millionaires” tax.
Or it could be called what it is: a tax on business. The fact is many business owners with loss carryovers and tax credit carryovers from prior years have only just started making a profit after suffering through the economic downturn. If the governor’s tax plan becomes law, business owners will be hit with the double-edged sword of an increase in business and individual taxes.