>>Not only did the state's Franchise Tax Board (FTB) eliminate a tax break on capital gains for small business owners and investors, it announced the tax would be reinstated retroactively.<p>This isn't correct at all. The board had to eliminate the entire section that provided the tax break because the 80% requirement for california businesses was struck down as unconstitutional. The law said that there were a variety of conditions that must be met to be eligible for the tax break and this was one of them. Every requirement had to met to get the tax break, since one was unconstitutional the tax break itself couldn't stand. The FTB did what it was legally required to do.<p>In terms of the retroactivity, it isn't as clear when a tax itself is struck down and the board must 'fix' the tax so it isn't discriminatory. There are arguments against what the board did: <a href="http://articles.latimes.com/2013/feb/05/business/la-fi-calif-tax-takeback-20130206" rel="nofollow">http://articles.latimes.com/2013/feb/05/business/la-fi-calif...</a>