FTB tax grab an acid test for ‘business-friendly’ Jerry Brown

Jan. 26, 2013

By Chris Reed

There’s finally some mainstream media coverage of the astounding decision of the Franchise Tax Board to rewrite a tax break and go after profits accumulated by some business owners that date back to 2008. The U-T San Diego story by Chris Cadelago only makes the money grab seem all the more outrageous in that it is depicted as something that was conceived of and executed solely by FTB bureaucrats, without the knowledge or consent of elected officials.

“SACRAMENTO — About 2,000 small business owners and investors across California are being forced to retroactively pay the state four years of assessments totaling $120 million plus interest, based on a decision by the Franchise Tax Board.

“In December, the state agency that administers personal income and corporate taxes ended a nearly 20-year-old tax incentive designed to spur investment in startup companies and small businesses, citing a court ruling. The benefit allowed small business investors who sold their stock at a gain to exclude half the profits from their income taxes. …

“The decision was made at the staff level, not by the three members of the Franchise Tax Board — John Chiang, state controller; Jerome E. Horton, chairman of the Board of Equalization and Ana Matosantos, state finance director.”

The article notes that Sen. Ted Lieu, D-Torrance, and Assemblyman Jeff Gorell, R-Camarillo, are upset with the FTB and may seek a reversal of the ruling, but where’s Jerry Brown?

For more than a year, our governor has sold himself as a critic of bureaucracy and mindless regulation and a champion of a business-friendly state government. He did so again in his State of the State address.

The FTB money grab is an acid test of whether it’s just more Moonbeamian hot air or whether the governor really believes what he says.