Businesses operating in California today face a number of obstacles that threaten to drive them out of the state, or into the underground economy.
From excessive taxes and fees to overly burdensome regulations, California is not creating incentives for businesses to invest in our state. One of these obstacles is the $800 minimum franchise tax on businesses (C-corporations, S-corporations and LLC's). While $800 may not seem like a lot of money, it can have a significant impact on the bottom line of many small and start-up businesses operating in our state.
To better illustrate how outrageous this tax is, consider the minimum business taxes in some of our neighboring states. In Nevada, there is a $100 minimum business fee and no corporate income tax. Oregon imposes a minimum excise tax of just $10 on corporations. Businesses in Arizona pay a business license fee of $15 and a minimum tax of $50. Only C-corporations are subject to Utah's minimum tax of $100.
In an effort to address this issue and encourage more business investment in California, I have authored Assembly Bill 2178. This bill would reduce the annual minimum franchise tax on businesses in the state from $800 to $200. This would provide some tax relief to small business owners struggling in California and eliminate the need for small businesses to operate in the underground economy.
Savings from this tax reduction could be used to reinvest in the business, increase employee benefits or pay higher hourly wages or bonuses. For many start-up or struggling businesses, the $600 savings can constitute a substantial reinvestment that will benefit employers, employees, vendors and consumers.
Reduction of the minimum franchise tax encourages small businesses, operating from 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. I believe the best way to bring these companies out of the underground economy is to reduce the economic disincentives and excessive taxes for complying with state law.
From the expansion of existing regulations to the recent proposal to levy additional taxes on California's oil producers, many in Sacramento fail to recognize the impact that their proposals have on our economy and our future. The Legislature should not be making it more difficult for legitimate businesses to operate in our state. We need to eliminate the obstacles to doing business in California and support legislation that aims to foster a robust economy and a healthier business climate. AB 2178 is a step in that direction.
From excessive taxes and fees to overly burdensome regulations, California is not creating incentives for businesses to invest in our state. One of these obstacles is the $800 minimum franchise tax on businesses (C-corporations, S-corporations and LLC's). While $800 may not seem like a lot of money, it can have a significant impact on the bottom line of many small and start-up businesses operating in our state.
To better illustrate how outrageous this tax is, consider the minimum business taxes in some of our neighboring states. In Nevada, there is a $100 minimum business fee and no corporate income tax. Oregon imposes a minimum excise tax of just $10 on corporations. Businesses in Arizona pay a business license fee of $15 and a minimum tax of $50. Only C-corporations are subject to Utah's minimum tax of $100.
In an effort to address this issue and encourage more business investment in California, I have authored Assembly Bill 2178. This bill would reduce the annual minimum franchise tax on businesses in the state from $800 to $200. This would provide some tax relief to small business owners struggling in California and eliminate the need for small businesses to operate in the underground economy.
Savings from this tax reduction could be used to reinvest in the business, increase employee benefits or pay higher hourly wages or bonuses. For many start-up or struggling businesses, the $600 savings can constitute a substantial reinvestment that will benefit employers, employees, vendors and consumers.
Reduction of the minimum franchise tax encourages small businesses, operating from 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. I believe the best way to bring these companies out of the underground economy is to reduce the economic disincentives and excessive taxes for complying with state law.
From the expansion of existing regulations to the recent proposal to levy additional taxes on California's oil producers, many in Sacramento fail to recognize the impact that their proposals have on our economy and our future. The Legislature should not be making it more difficult for legitimate businesses to operate in our state. We need to eliminate the obstacles to doing business in California and support legislation that aims to foster a robust economy and a healthier business climate. AB 2178 is a step in that direction.