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New California Tax Policy – Retroactive Tax for Five Years WITH Interest

Posted by Cicero on March 26, 2013

Despite unanimous opposition from newspapers up and down the state, the Franchise Tax Board continues to stick by its decision to retroactively tax small businesses owners back five years for investing in California businesses. These are the people who are creating jobs and California is literally chasing them away.

One group of individuals is taking stand against the policy though – California Business Defense. The group will meet in San Diego next week and is specifically looking for more individuals who will be directly impacted by the policy. More information on the group and the status briefing in San Diego is available on the group’s website at www.cabusinessdefense.org.

Since 1993, small business owners and investors have been able to take advantage of a tax incentive that California actively promoted. The policy allowed stockholders who sold their share in a California business to reduce their tax liability by up to 50 percent or even 100 percent if the money from the sale was reinvested in a California business. The policy basically made it attractive for entrepreneurs to invest in small businesses and create jobs because it significantly reduced the tax liability for doing so.

Now though a court decided that this policy violated the commerce clause in the Constitution because it discriminates against out of state businesses. The FTB decided to embrace the court’s decision by retroactively taxing all the small business owners and investors who took advantage of the policy for the last five years. And not only that, but charge the tax WITH interest! The horrendous policy is expected to earn the state an easy $120 million.

But stop to think about what California is doing and the significance of what it means it could do in the future. These investors did exactly what they were asked to do by risking their own capital and investing in businesses in California. California promoted the tax break because it meant people were creating jobs and more people working. After receiving that benefit for two decades, California now wants to retroactively tax the very people that made the job growth possible. Some of those investments worked out and some of them did not but the FTB does not care and the tax will apply to all individuals even if they lost everything taking a risk to create jobs for California.

This policy has is so shocking that it has made national headlines on Fox News and Fortune, but the FTB stands by the decision. It has been likened to California changing the speed limit back down to 55 mph on highways, and then sending speeding tickets to everyone who drove over 55 for the last five years. That is exactly what is happening, and this decision by the FTB is the tipping point for many individuals, who can no longer justify the expense and risk of doing business in California. What message does it send to people considering starting a business if California can decide years down the road to penalize them for doing so?

Fortunately, Assemblyman Jeff Gorell, R-Camarillo and Sen. Ted Lieu, D-Torrance have stepped up in a bi-partisan effort to right the wrongs of the FTB. SB 209 would prohibit the state from charging interest and penalties in similar situations in the future.

At least one member of the FTB recognizes that this is a bad policy. In a letter to State Controller John Chiang, Board of Equalization Chairman Jerome E. Horton, and Director of Finance Ana J. Matosantos, Board Member George Runner urged them to reverse their decision to implement the policy. Despite the missive, no response has been seen from any of them.

California doesn’t need more laws to correct this policy. It needs needs policy makers with common sense. And this is another unfortunate example of exactly what is wrong with this great state.



Posted in Board of Equalization | Tagged: , , , , , , , | 3 Comments »

Mismanagement, Wasteful Spending By Regulators Plague Effort to Restore Central Valley Salmon Populations

Posted by Cicero on August 6, 2012

At a time when the Governor is struggling to build support for his Bay Delta Conservation Plan and just weeks after the Safe, Clean, and Reliable Drinking Water Supply Act was pulled from the ballot for the second time, Californians are naturally skeptical about the competence of those responsible for ensuring both a clean and reliable water supply, and a healthy Sacramento-San Joaquin Delta.  One of the key elements of a healthy Delta is a stable population of the state’s iconic Central Valley salmon – something the state has not had for many years.

One group of stakeholders decided to find out why, despite over a billion dollars spent on protecting fish, we still do not have a healthy salmon population. The results of the investigation were not surprising – too much government, and no effective coordination. The San Joaquin Tributaries Authority (SJTA), State and Federal Water Contractors Agency and Northern California Water Association combined their resources to conduct the study, which can be found online here. The group, collectively known as the Salmon Recovery Group, found conflicting goals and inconsistent strategies of the regulators of the Delta had effectively cancelled out each other’s efforts.

The three entities primarily responsible for management of the fishery include the National Marine Fisheries Service (NMFS), U.S. Fish and Wildlife Service (USFWS), and California Department of Fish Game (CDFG). The target population goal ranges from doubling the salmon population to removing the endangered list. The timelines are also inconsistent with each other as are the strategies being used to achieve the goals.

In a press release issued last week by the SJTA, the executive director of the SJTA expressed a sentiment that probably speaks for most Californians who see the results of this study, “[We] have made significant investments in the recovery of native salmon populations and we are committed to working toward a sustainable long-term plan,” said Allen Short, executive director of the SJTA and general manager of the Modesto Irrigation District. “But this report is disturbing, because it shows a level of mismanagement – and waste of taxpayer dollars – that raise serious doubts about regulators’ ability to chart a productive course in the future.”

The study went on to state several potential solutions, most obviously the common sense solution of more coordination between agencies. The study was sent to each of the agencies, but no public response has been issued.

As the report notes, “None of the three restoration plans reviewed adequately provide a clear and succinct strategy for recovering Central Valley anadromous salmonid stocks to viable and sustainable levels. The principal reason is that these plans were prepared by different agencies for different purposes largely independent of one another. This has led to numerous inconsistencies and disconnects among the three plans.”

While many people may not find the fact that the government is wasteful and spent billions of dollars with little return surprising, that should not make this report any less significant. Water is critical to the future of California and until those responsible for the management of California’s water supply get on the same page, we will unfortunately continue to see even more waste and fewer results.

You can read the study in its entirety here.

Posted in California | Tagged: , , , , | Leave a Comment »

Native American Republican Super PAC formed in California

Posted by Cicero on July 16, 2012

According to the latest FEC filings, a new political action committee has been formed in Sacramento named the Native American Republican Super PAC.

As the name clearly indicates, the focus of the group will be on advancing Native American interests through conservative candidates and initiatives.

When many Californians think of Tribes in California, they think of the 64 casinos currently operating throughout the state. Although for many Tribes this has been a lucrative source of financial support, the concept of gambling and casinos is in stark contrast to the conservative values of many Republicans.

But as Kilma Lattin, one of the founders of the Native American Republican Super PAC described, beyond Indian gaming, Tribes and Republicans do share a lot of common ground. Both are strong supporters of our military – Native Americans have the highest per capita enlistment rate of any minority group going back even before the Revolutionary War. Both are also staunch advocates of self-determination and preserving the traditions of the past for future generations.

Lattin, a member of the Pala Band of Mission Indians in northeast San Diego County and former member of the Tribal Council, also stated, “Republicans have the right ideas to spur growth in the economy, and Tribes should be paying attention because a strong U.S. economy will give Americans the discretionary income necessary to visit Tribal enterprises.”

Lattin, who recently graduated at the top of his class with an MBA from USC and is a former U.S. Army Aviation Officer continued, “If the U.S. economy is doing well, then Tribal economies are doing well also. Democrats continue to ‘double down’ on Keynesian Economic Theories, mainly federal spending.  This recycling of tax dollars does nothing to promote the generation of new dollars. Continued federal spending and ‘public works projects’ along with increased healthcare costs on businesses, and the possibility of new taxes on top earners do not promote a safe environment for businesses to invest.”

The Native American Republican Super PAC notes that over the last decade Tribes in California have progressed to be some of the most influential groups in politics today, but much of that influence has gone toward a wide variety of candidates to further the specific interests of the Tribe. This super PAC is unique because of its blend of a conservative agenda with the relatively new-found influence of Indian Tribes.

The Native American Republican Super PAC has said it is looking to hit the ground running and expects to be involved substantially in the election this November. Lattin and other leaders of the Native American Republican Super PAC are currently soliciting contributions from the 110 Tribes throughout the state.

Posted in California | 1 Comment »

State Water Resources Control Board Study on Hydroelectric Power Along Delta Tributaries Ignores Key Information

Posted by Cicero on February 23, 2012

In this drier than average year, water continues to be a point of major contention for Californians; decisions on water policy should be made with all of the stakeholders at the table, which includes northern and southern California, the valley, water districts that manage the water and many others. However, this basic principle seems to have been ignored once again in the State Water Resources Control Board’s latest report related to the impacts of hydroelectric power generation.

According to a press release from the newly formed San Joaquin Tributary Association, the group consisting of water districts along the San Joaquin River, the SWRCB never even contacted a single water operator along to river for its analysis. These are the organizations who are currently operating the existing hydroelectric power facilities along the river, but the SWRCB did not  bother to consult them.

As a result, the release further claims the results of the report cannot be trusted and raises serious doubts about the thoroughness and overall quality of the report and its conclusions since it does not include any information from the people who understand the dynamics of hydrogenenation in the region best.

This appears to be yet another case of the State ignoring information it does not want to hear in order to obtain the results it wants to find.  The report is part of mandatory proceedings leading up to the state board’s adoption of new flow standards on the Stanislaus, Tuolomne and Merced rivers, which feed the Sacramento-San Joaquin Delta. So obviously the State is not going to consult the people that it is planning to take the water from later on down the line.

As Allen Short, the Manager of the Modesto Irrigation District and member of the San Joaquin Tributary Association said in the release, “You cannot conduct a vital analysis like this without gathering accurate information from the sources on the front lines. Decisions with implications of this magnitude need to be made with all of the information on the table. This process demands real science, not abstract predictions, because in the end, it will be California ratepayers who suffer the consequences.”

You can read the whole press release from the San Joaquin Tributary Association here.

Posted in Uncategorized | Tagged: , , , , , | 1 Comment »

Governor Brown Appoints First Tribal Advisor

Posted by Cicero on February 8, 2012

Back in September at the Tribal Alliance of Sovereign Indian Nation convention at the Sheraton Grand in Sacramento, the governor announced he was creating a position to serve as a direct link between the Governor and the over 100 Indian Tribes in California. Today the Governor announced that Cynthia Gomez will serve as the Tribal Advisor and also as executive Secretary for the Native American Heritage Commission.

The position was created by Executive Order B-10-11 to bolster communication between the Brown Administration and Tribal Governments. Gomez will advise Brown on matters relating to legislation, policy and regulation. The position does not require Senate confirmation and the total compensation for the Democrat Gomez will be $140,000 a year.

Gomez is a graduate of the Lorenzo Patino Law School in Sacramento and has most recently been working as chief justice of the Shingle Springs Band of Miwok Indians Tribal Court since 2010.

Whether this is an efficient use of $140,000 in tax dollars remains to be seen. The description of Gomez’s job seems overly broad in its “legislation, policy and regulation” directive. Hopefully Gomez genuinely finds a way assist California’s most underserved tribes and is not a $140,000 mouthpiece with services available to highest bidder for the state’s most influential tribes and their business partners.

Posted in California | Tagged: , , , | Leave a Comment »

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