California Legislature votes to end retroactive tax on investors
SACRAMENTO -- California lawmakers have sent the governor a bill that would end state efforts to collect a retroactive tax increase from investors.
A signature by Gov. Jerry Brown would relieve about 2,000 taxpayers from having to pay $120 million in back taxes.
The California Franchise Tax Board made an effort to collect the money after the state Court of Appeal ruled that a tax break, known as the Qualified Small Stock exemption, was partially unconstitutional. That left shareholders on the hook for income from stock sold between 2008 and 2012.
Affected taxpayers protested to the Legislature after receiving official notices that they owed back levies. As a result, Sen. Ted W. Lieu (D-Torrance) introduced SB 209. Assemblymen RAul Bocanegra (D-Pacoima) and Mike Gatto (D-Los Angeles) authored a similar bill in the lower house, AB 1412.
The bills were needed, said Lieu, so that innocent taxpayers would not be hurt by a court ruling they had nothing to do with.
“This is about the rule of law,” said Lieu. “You simply cannot punish people for doing what we asked.”
Brown, who has not taken a public position on the Lieu bill, has until Oct. 13 to sign, veto or let the measures become law without his signature.
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