Another Hand

A controversial tax measure — one provision under discussion in a state budget plan
calls for $8.2 billion in new taxes — is designed to close a loophole for large corporations
and generate $1.1 billion for the state. But small businesses earning less than $5 million
in revenue may suffer the most negative effects.

"Although 80 percent of the total taxes would come from businesses with more that $5 million
in revenues, it is the 20 percent of the total businesses in California that make less than this
that will suffer the most" said Scott Hauge, founder and president of Small Business California,
a business advocacy organization.

Companies in California are permitted to carry forward net operating losses incurred in one year
and use them as deductions against earnings in future years. The proposed budget would suspend
the losses for three years. If a business operates at a loss — often the case with start-ups or
businesses that add employees, expand inventory or upgrade equipment — a business could not
carry over that loss in subsequent years to mitigate the tax burden.

One hellava hand!  Fold and deal again.

  

Tim Johnson
www.CaliforniaBusinessMinute.com