Many companies and recently launched LLCs in California are fighting the state's proposed Proposition 24 bill, which, if passed, will repeal several laws that have proved beneficial to the state’s businesses.
The laws, to be voted on in state elections this November, would reverse a business’ ability to share tax credits among their subsidiaries. They would also negate the law’s lowering of income taxes for businesses operating in several states, as well prohibit businesses from being able to carry over annual profits so as to avoid income tax rates.
Because of the overall tax increase on California’s LLCs and other corporations, Proposition 24, if passed, is expected to increase the state’s revenue up to $1.3 billion annually.
But opponents argue that the bill could hurt businesses by discouraging investors. “Prop. 24 ... would limit a company’s ability to carry forward a net operating loss to a profitable year and, thus, reduce its taxes that year,” wrote Eli Segal in the San Jose Business Journal, paraphrasing the owner of a recently incorporated San Francisco business. “She said this limitation could lower the profits at a company like hers and scare off investors.”
As the debate continues to unfold, many are closely watching incoming data on small business performance, as these numbers are usually indications of the economy as a whole.
Tags : ca, incorporation news, taxes
Posted: Oct 1st, 2010