And you’re just figuring this out now?
Small-business investors in California were promised big breaks five years ago, but now they’re being told to pay up, instead after a court ruling.
After following the law, many of them are getting hit with tax bills as high as $250,000. […]
“They relied on California law as it was written, that they would get a tax break if they invested in certain kinds of businesses,” Lieu said.
But a court ruled in December that practice by the state was unconstitutional. Now, the Franchise Tax Board wants its money. […]
It’s estimated that 2,000 small-business investors will have to pay these retroactive taxes. If the senator’s bill doesn’t pass, they’ll be out up to $120 million.
“A lot of them don’t have that money anymore. Its been reinvested,” DeVore said.
Lieu says it’s not as if the state is counting on the case. The $120 million would be a surprise windfall for the state.
“They obviously can’t go backwards 5 years in time and change their investment or change what they did.” he said. “They are stuck with what they did and its unfair to penalize them.”
Investors who could be hit by the retroactive taxes did not want to go on camera, fearing they would become an easy target for the Franchise Tax Board.
If I were one of these small businesses and they came after me, I’d liquidate, file for bankruptcy, and then start over in a free state like Texas.
Isn’t tyranny fun?
A morality endorsing fraud results in fraud? Wow, who knew?
The State giveth, and the State taketh away…
One more OT:
Why didn’t the Obamas get a rescue dog?
Simple answer: Because adopting a dog takes one or more home visits, and the White House has been closed to the public since the sequester.
“A lot of them don’t have that money anymore. Its been reinvested,” DeVore said.
Just print some more… oh, wait.
Mondamay, there’s no way they even spend anytime with those dogs other than photo ops. The kids have never been pictured with them. Presbo never works in the Oval Office so not only are the dog pictures staged, so are those of him “working”. If you see any pictures of M’chelle with the dog at any events with kids, the dog is always looking over at his handler. You know, his REAL dad?
They aren’t dog people or they would have come to DC with their own dogs and not made such a production out of getting one to ignore.
I assume that this decision was made by a California State Court based on the California Constitution, as the article is unclear on that point. I don’t have the time to dig into CA jurisprudence, but normally, retroactive effects of judicial rulings only occur if they benefit individuals, not the state. Otherwise, you run afoul of the prohibition of ex post facto laws. Rulings which nominally benefit the government are only prospective, if the law or statute as been in effect during the judicial proceeding. Suffice it to say, there will be more litigation if CA intends to collect these retroactive taxes.
Suffice it to say, there will be more litigation if CA intends to collect these retroactive taxes.
So a bunch of lawyers got together and crafted a law that would allow small-business investors — after consulting with their lawyers, of course — to get a tax break on their investments. This law was challenged by other lawyers, and a big super-lawyer in a black robe decided that the latter lawyers were right, and the former lawyers were wrong, so now the investors’ bunch of lawyers and the State’s bunch of lawyers will battle it out in front of another black-clad super-lawyer while the first bunch of lawyers watches from the sidelines.
If a legislator whose day job is in commercial fishing is expected to recuse himself from votes on fishing regulations due to conflicts of interest, then it only follows that lawyers in the Legislature should recuse themselves from voting on ANY law for the same reason.
I’m getting really sick of this ongoing law-school circle jerk at my expense.
What worse is that, whichever way this works out, it will be the citizens and taxpayers of California that will lose.
If the FTB wins, they get their $120 million windfall (enough for about 8 hours of operation), but lose any chance of EVER getting out-of-state investors from spending another cent again.
If the FTB loses, they don’t get the $120 million, AND there will be investors who take their money and run to more business friendly states, while State legislators pass new taxes to make up their $120 million “loss”.
Kilkenny Cats, the lot of them.
Squid, I wish there was more information. I don’t know who the plaintiffs were or the circumstances surrounding the case. The whole thing seems weird to me, and yes, I do the law thing. I’ve never heard of a challenge to a tax credit or deduction before. But then, it’s CA so who knows what manner of weirdness exists west of the Sierra Nevada.
Unfortunately, squid, the cost of litigation for a lot of these little guys is prohibitive.
The unintended consequence of which is to drive even more business out of California.
This is the same reason that poor piss ant autocratic third world countries stay piss ant autocratic third world counties. Perhaps you can convince some one to invest in your shitty state one time with a great offer but when you keep changing the deal to screw over investors suddenly the those investments stop. Funny how that works.
This is
democracyerr rule oflawthat is lawyers looks like.grrrrrr
I would think the “logic” is that collecting the retro tax would benefit those who did not qualify for the tax break.