Bay Area Council Leading the Fight to Restore CA Start-Up Incentive
As news of the retroactive entrepreneur’s tax spreads across the state, the Bay Area Council is working with Gov. Jerry Brown’s office on the issue and is continuing its work with Assemblymember Bob Wieckowski to develop a legislative fix. As previously reported in the Flash, the Franchise Tax Board in response to a court ruling eliminated the Qualified Small Business (QSB) exclusion, which had allowed for a 50% tax reduction on the sale of stocks in a small business with under $50 million in assets and at least 80% of its payroll based in California. Worse, the action was made retroactive to 2008. The exclusion was one of the few benefits the state had to incentivize start-up founders to keep their growing businesses in California and to incentivize investors to fund those early-stage companies. We have enlisted the help of tax law experts and Bay Area Council members Deloitte and Manatt, Phelps & Phillips to provide input on options to reinstate the QSB and limit the impact on start-up founders, investors and employees. Our recent Tech Works study highlighted the importance of these businesses as a primary jobs-creation engine. The Bay Area Council is also now part of a coalition of start-up founders and tech groups raising the profile of this issue and working towards a solution. To support our work on QSB and to engage with us in our California tax policy work, contact Emily Finkel.