BIA Says State Budget that Included LLC Tax a "Compromise" That They Supported

Contact: Adrienne Rupp

Business and Industry Association

Office: 603.224.5388 x114

Mobile: 603.731.7754

arupp@nhbia.org

BIA: State budget a compromise

New Hampshire’s statewide chamber of commerce supports compromise budget

CONCORD, N.H. – June 23, 2009 – Having received written confirmation Monday evening from Kevin Clougherty, commissioner of the NH Department of Revenue Administration, that the extension of the interest and dividends tax embedded in the state budget will only apply to individuals receiving distributions from limited liability companies (LLCs) or partnerships only to the same extent that distributions to corporate shareholders are taxable as dividends, the Business and Industry Association today announced its support for the state budget approved by House and Senate conferees last week.

Calling it a “compromise,” BIA President Jim Roche said the budget removed several revenue sources that would have adversely affected the business community directly and indirectly, including the suspension of the BET credit against the BPT, capital gains and estate taxes, and freezing of the insurance premium tax reduction. Roche nonetheless expressed unease over last minute inclusion of the interest and dividends tax on LLC distributions and additional cuts to the Medicaid program that will ultimately result in higher insurance premiums to the business community.

“It’s not a perfect budget,” said Roche. “Throughout the budget process, our message to legislators was to model their actions on what businesses of all sizes throughout New Hampshire have been doing for months—tightening their belts—not raising taxes or increasing costs for business. Businesses will lead New Hampshire out of this recession if given a chance.”

BIA was particularly distressed about the extension of the interest and dividends tax to LLC distributions at the last possible moment last week. Calling it “an example of poor public policy-making,” Roche went on to say the written assurances from Clougherty have addressed BIA’s concerns but that confusion over the language could have been easily avoided had the Legislature followed standard processes for hearing and considering legislative proposals.

“In the end, our concerns regarding the LLC provisions were answered,” said Roche, “but the past several days have shown there are risks associated with passing complex tax legislation without a thorough public review.”

While recognizing that HB1 and HB2 are imperfect, BIA believes passing the budget on Wednesday is critical and that one possible result of not passing the budget will be a reopening for discussion of any or all of the more onerous business tax proposals previously included. “It’s not unreasonable to believe a budget stalemate between the House and Senate could lead to increases in the BET and/or BPT,” Roche said. “That would spell disaster for New Hampshire businesses, job creation and economic recovery.”