No to Proposition 24

By October 8, 2010

Proposition 24 is simple. It is another attack on small businesses by the California Teachers Association, a group that is all about money and very little about what will reduce the drop-out rate in Southern California and what will improve educational outcomes in this state.
Proposition 24 would end the Net Operating Loss provision of the California Tax Code, which is, on this point, in conformity with federal tax law. NOL allows a business that had a loss this year — and there are many facing a year without profits — to apply for a refund for the two prior years when business may have been better. The balance of the loss is carried forward over the next 20 years. That is the way federal tax law operates and the way the state operates.
The CTA calls it a loophole for big corporations. In reality it is small businesses that are most in need of this tax equity measure. Congress added NOL to the tax code to compensate for inequities that result from the progressive tax system. The state Franchise Tax Board estimates eliminating the Net Operating Loss provision would affect 120,000 businesses. This is where the jobs are generated. In a state with 12.4 percent unemployment, there’s not a lot of job generating going on. And this proposition will only worsen the situation by permanently removing the NOL from state tax codes.
The state budget deal recently reached suspends the Net Operating Loss provision for two years, rendering this proposition mostly moot. The budget deal is a temporary suspension and will return state tax law into conformity with federal tax law in this one area. Don’t make it
The Mountain Democrat urges a no vote on
Proposition 24.

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David Martinelli

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