I'm pleased to have authored Assembly Bill 1179 (AB 1179). This bill is a straightforward measure that brings much needed relief to California's business community, especially small businesses.
AB 1179 would reduce the annual minimum franchise tax on businesses in California from $800 to $100.
The amount may seem small, but for many start-up or struggling businesses, the $700 savings can constitute a substantial reinvestment. Savings from this tax reduction could be reinvested back into the business, pay higher hourly wages or bonuses. Employers, employees, vendors and customers will benefit from this reinvestment.
Additionally, the reduction of this tax encourages small businesses, especially struggling family businesses operating out of the home or garage, to file the proper paperwork and comply with existing state laws governing the workplace. In the long term, it is in the state's best interest to reduce the number of businesses that are operating in the underground economy.
We have all heard the radio commercials reaching out to California companies and explaining the tax benefits of incorporating and relocating to Nevada.
The fact is our neighboring states have a significantly smaller minimum tax on businesses.
For example, Nevada and Washington have no state income tax, Oregon imposes a minimum tax of $10, only on corporations, and Arizona's minimum tax is $50 only on corporations. Utah imposes a $100 minimum tax only on C-corporations.
The state of California cannot lose companies to our neighboring states and we must stop hindering businesses' ability to compete in today's global marketplace.
AB 1179 would reduce the annual minimum franchise tax on businesses in California from $800 to $100.
The amount may seem small, but for many start-up or struggling businesses, the $700 savings can constitute a substantial reinvestment. Savings from this tax reduction could be reinvested back into the business, pay higher hourly wages or bonuses. Employers, employees, vendors and customers will benefit from this reinvestment.
Additionally, the reduction of this tax encourages small businesses, especially struggling family businesses operating out of the home or garage, to file the proper paperwork and comply with existing state laws governing the workplace. In the long term, it is in the state's best interest to reduce the number of businesses that are operating in the underground economy.
We have all heard the radio commercials reaching out to California companies and explaining the tax benefits of incorporating and relocating to Nevada.
The fact is our neighboring states have a significantly smaller minimum tax on businesses.
For example, Nevada and Washington have no state income tax, Oregon imposes a minimum tax of $10, only on corporations, and Arizona's minimum tax is $50 only on corporations. Utah imposes a $100 minimum tax only on C-corporations.
The state of California cannot lose companies to our neighboring states and we must stop hindering businesses' ability to compete in today's global marketplace.