

The California tax that terrifies tech - mactitan
http://tech.fortune.cnn.com/2013/02/21/the-california-tax-that-terrifies-tech/?iid=SF_F_River

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cpleppert
>>Not only did the state's Franchise Tax Board (FTB) eliminate a tax break on
capital gains for small business owners and investors, it announced the tax
would be reinstated retroactively.

This isn't correct at all. The board had to eliminate the entire section that
provided the tax break because the 80% requirement for california businesses
was struck down as unconstitutional. The law said that there were a variety of
conditions that must be met to be eligible for the tax break and this was one
of them. Every requirement had to met to get the tax break, since one was
unconstitutional the tax break itself couldn't stand. The FTB did what it was
legally required to do.

In terms of the retroactivity, it isn't as clear when a tax itself is struck
down and the board must 'fix' the tax so it isn't discriminatory. There are
arguments against what the board did:
[http://articles.latimes.com/2013/feb/05/business/la-fi-
calif...](http://articles.latimes.com/2013/feb/05/business/la-fi-calif-tax-
takeback-20130206)

