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Some California Small Businesses Wary of Brown's Prop 30

Oct 24, 2012

California Governor Jerry Brown’s November tax measure is drawing some of its strongest opposition from small business groups. Ben Adler reports from Sacramento on how some small businesses would be affected by Proposition 30.

James Wright owns part of a small business in Los Angeles County that manufactures manhole covers – with about 10 million dollars in sales. Wright doesn’t take anywhere near that much home to his family. But he does have to pay personal income taxes on company profits … using money from the business itself.

He says he's worried about the potential one-two punch of Prop 30’s approval and the expiration of some of the Bush tax cuts. Both would raise income taxes starting at $250,000 a year.

“What this means is that the corporation’s gonna have to pay more taxes – which means there’s gonna [sic] be less available to hire people or to retain people,” says Wright. He says it also could hurt the company's ability to give current employees a raise.

“$250,000 is deemed to be wealthy. I can tell you right now, I am not wealthy. I live in a 1,080 square foot home in Covina and trying to put my daughter through school and trying to support a family. And it’s very difficult to do that with all these additional taxes,” says Wright.

But Wright’s company appears to be the exception, not the rule. Franchise Tax Board data show only a small percentage of California small businesses make $250,000 a year or more. The rest would not be impacted by Prop 30’s income tax increase.