Posted Sep 15, 2013 by Martin Armstrong
California small business owners and investors are facing $120 million in back taxes after a 20-year-old tax exemption was struck down by an appeals court last year. That’s right. Government always wins. They make a mistake, and you still pay. We would be better off with the Mafia in charge – at least you can negotiate with reason.
Since 1993, California provided that you paid only half of the capital-gains taxes due on sales of stock in businesses with less than $50 million in gross assets. The hitch was that the business must keep at least 80 percent of payroll costs and assets in the state. In August 2012 the tax exemption was ruled unconstitutional ob the basis it interfered with interstate commerce. That was about as rational as a metal patient on drugs. If the court ruled it denied equal protection in the sense of “justice for all” I would agree with the decision. But to claim it interfered with interstate commerce by trying to keep people in the state with incentives is nonsense. New Jersey has an EXIT tax. You leave, and they want more taxes. That will never be ruled unconstitutional because the Supreme Court has held taxing powers are unlimited in a fundamental sense – nobody in government ever met a tax they did not like to suppress others with.
As always, in comes the bureaucrat looking to get even with those in the private sector for having talent they lack and money they get only by taking bribes. These are typically the people who were stuffed in gym-lockers in high school and it is pay-back time for them. They hate people who make money – look at one in the eyes. You see hatred paired with stupidity.
Faster than a speeding bullet, the state’s Franchise Tax Board was signaling plans to collect retroactive taxes dating back to 2008 from more than 2,000 small businesses licking their chops for an expected take of $120 million. The small business owners screamed and turned to seek a legislative solution. In February state tax collectors offered to hold-off on issuing tax summons that would not down include interest and penalties provided they signed waivers extending the statute of limitations so they could go after them later. The state Senate passed a bill that reduced the total amount of retroactive tax due by only 76%. So you see, the bastards just cannot keep their hands out of other people’s pockets.