UL Reports that Business Owners Asking Governor to Ax the LLC Tax

Business owners to governor: Ax new tax

By TOM FAHEY
State House Bureau Chief
10 hours, 13 minutes ago


Representatives of the small business community called on Gov. John Lynch today to use his executive power to block a new tax they say will hurt the state economy.

The group opposes a proposed expansion of the state's 5 percent interest and dividends tax to include distributions by limited liability corporations (LLCs).

Speakers said the new tax will hurt job growth and investment, and called on tax haters to file comments on their Web site, www.stopthellctax.com.

The tax change, expected to produce $30 million, passed at the last minute as part of budget negotiations in June. It will apply to all distributions made since Jan. 1, 2009.

The Department of Revenue Administration plans a public hearing tomorrow on the rules it will use to collect the tax.

Lynch press secretary Colin Manning said the governor thinks the tax change makes the state's tax code fairer.

"It's important that we close this loophole and that we apply fairness in the way we treat all business," he said. "It's not fair to have a business that is set up as a corporation pay one set of taxes, and another business set up as an LLC play by a different set of rules."

Andy Sanborn of Concord, an unsuccessful 2008 state Senate candidate, said the tax change "isn't closing a loophole; it's squeezing the remaining blood from the stone."

Sanborn, owner of the Draft Restaurant and sports bar, said: "This isn't a Republican or Democratic issue, or an Independent or Libertarian issue. It's about every person and business in this state."

Lobbyist and former state Sen. Bob Clegg said reaction to the tax is only building now because the DRA took so long to write the rules, and most small business owners didn't know about the tax change.

Clegg said the $30 million that the state collects through the tax is $30 million that won't be available for investment in new jobs and production.

A number of business people and Republican leaders have called on Lynch to expand to five the number of hearings on the DRA rules. One session is not enough to answer all questions, they said.