California Tax Measure Adversely Impacts Small Business

2008-07-24 02:00:05 -

www.smallbusinesscalifornia.org - PVB Public Relations Paul von Beroldingen, 415-751-1858 (Off) Cell: 415-264-8524 paul@pvbpr.com or Small Business California Scott Hauge, President, 415-680-2109 (Off) Cell: 415-699-9100 shauge@cal-insure.com Prestigious business organizations throughout California are urging Sacramento legislators and Governor Arnold Schwarzenegger to grant an exemption for small businesses in a proposed tax measure suspending net operating losses for three years.

The controversial tax measure -- one provision in a state budget plan calling 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, more than six small businesses would be impacted for every large one," according to Scott Hauge, founder and president of Small Business California, a business advocacy organization, and president of CAL Insurance & Associates in San Francisco.

"California's economy is driven by 3.2 million small businesses that struggle to endure economic downturns, while investing in future growth and creating most of the new jobs at considerable personal and financial risk," Hauge adds. "The issue is not just a 'small business' issue. It's really about the state's overall economy."

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 -- it could not carry over that loss in subsequent years to mitigate the tax burden.

The list of 29 organizations signing a letter to state legislators requesting the exemption includes key chambers of commerce, local merchant groups, and statewide manufacturing and building associations: -0- Asian Business Association of Orange County Associated Builders and Contractors of California Building Owners and Managers Association of San Francisco California Association of Competitive Telecommunications Companies (CALTEL) California Association for Micro Enterprise Opportunity (CAMEO) California Chapter of the American Contractors' Association California Employers Association California Fence Contractors' Association California Metals Association Engineering Contractors' Association Flasher/Barricade Association Golden Gate Restaurant Association Los Angeles National Association of Women Business Owners Marin Builders' Association Napa Chamber of Commerce National Association of the Remodeling Industry San Francisco Bay Area Oakland Metropolitan Chamber of Commerce Plumbing Heating and Cooling Contractors of California San Diego Chamber of Commerce San Francisco Chamber of Commerce San Francisco Council of District Merchants Associations San Francisco Hispanic Chamber of Commerce San Francisco Marina Merchants Association San Francisco National Association of Women Business Owners San Francisco Small Business Advocates San Francisco Small Business Network Small Business California Small Business Majority Small Manufacturers Association of California

Organizations Working on Behalf of 3.2 Million Small Businesses
Request Exemption from Loss Carryover Tax Suspension