Governor Jerry Brown yesterday declared that the decision by the California Chamber of Commerce to stay neutral on his tax measure, Proposition 30, is “basically clearing the way” for the passage of the measure.
Not so fast, governor.
The chamber represents large businesses, many of which are afraid to take a position opposed to the governor considering he has the power to approve or veto legislation that concern the big businesses. The big businesses are also concerned that if Prop 30 fails, the governor will promote other tax measures that would affect the businesses directly. But the tax increase measure is not about big corporations.
Corporations won’t pay more in taxes if Prop 30 passes. Many small businesses will.
Many small businesses pay their taxes through personal income tax. These small businesses will be greatly affected by the tax increases included in Prop 30.
The Tax Foundation, a nonpartisan tax research group based in Washington, D.C., annually ranks the states according to tax burden and business tax climate. California currently ranks 5th highest in tax burden and a lowly 48th in the category of having a good business tax climate. In its most recent report, note what the Tax Foundation says about the current tax burden on small business in California:
Since most small businesses are S Corporations, partnerships, or sole proprietorships, they pay their business taxes at the rates for individuals. That makes California’s taxes on small businesses some of the most burdensome in the nation. (Emphasis mine.)
The situation for small business will only become more difficult if Proposition 30 passes.
Small business understands what Proposition 30 means and the Chamber of Commerce position of neutral will make no dent in the campaign to defeat it.