Ways and Means will hold a full committee work session on HB 1607 - the bill discussing "reasonable compensation" this Friday January 22nd at 9:30 a.m.
This is not in the calendar and the notice that was e-mailed to committee members but did not have a room number on it.
Tell all of your interested constituents ---
Saturday, January 16, 2010
Former state revenue chief slams small business tax as 'Insidious' job killer Could cost 600 jobs a year, Blatsos says
Former state revenue chief slams small business tax as 'Insidious' job killer
Could cost 600 jobs a year, Blatsos says
By Nate Giarnese
Reporter
nate@conwaydailysun.com
—
The former chief of the state Department of Revenue Administration said a controversial tax hike on limited liability corporations could wipe away 450 to 600 jobs a year in the Granite State, striking sharply at the heart of the state's historic small business advantage.
“Forty-two percent of of all jobs in the state come from small business,” said Philip Blatsos, who worked 30 years for the revenue department and was commissioner from 2001 to 2007.
He said a 5 percent interest and dividends tax being tacked onto distributions made by LLCs and other small businesses forces the owners of mom and pop operations to cut back on hiring as they face troubling uncertainty about the future of tax bills.
Small businesses file as sole proprietorship or LLCs to gain shelter from certain tax and insurance regulations imposed on larger corporations. LLCs, including shop owners and loggers, are prevalent in the North Country.
“They mortgage their house to make payroll for God sakes,” Blatsos told The Conway Daily Sun.
The addition of a dividends tax in many cases triggers an additional 8.5 percent state profits tax to kick in, fueling in reality a much larger and unexpected hike for small business owners, Republicans complain.
Blatsos, representing a pro-business group, attended a final of four public hearings on the tax, during which about 100 came out at Kennett High on Saturday.
It is the result of a legislatively-set DRA administrative rule change last year. It's now under fire by Republicans and business groups as a bid to insert the hikes without a legislative hearing. The rule is expected to be posted in coming days and the tax could take affect in April and be retroactive to January 2009, state Rep. Gene Chandler, R-Bartlett, said.
Blatsos said an increasing New Hampshire tax burden coupled with a sudden uncertainty in the future of the state's commercial tax code threaten to curb economic growth. Small businesses may pull back on expansion while prospective business owners may think twice before moving to New Hampshire, Blatsos said.
“New Hampshire was always very stable as far as taxes,” he said. “We're the best. This is insidious, this is a real danger.”
But an area Democrat said the change simply alters how an existing tax on larger corporations is applied. It was framed by revenue officials as spreading tax equity across small and large businesses, the latter of which already pay an interest and dividends tax, state Rep Tom Buco, D-Conway, said.
Moreover, he said the tax was critical to help the governor close a huge budget gap last year after a slew of other unpopular tax hikes were scrapped.
“The only way to increase revenue is to have these small increases every couple of years in the sources of revenue that we have,” Buco said. “It was presented as a way to close a loophole in the interest and dividends tax.”
The tax targets distributions made by LLCs. That includes payments made to owners or partners beyond what the state decides is beyond reasonable compensation, Republicans complain.
“A large portion of businesses are going to be taxed at 13.5 percent,” state Sen. Jeb Bradley, R-Wolfeboro, said. “In reality it is an income tax on business owners.”
Others insist it is not.
“Most people who have LLCs are not even going to be affected by this,” said Buco. “You don't have to pay tax on your compensation.”
Buco noted other unpopular tax proposals, such as an entertainment tax, were stripped out of the 2010 budget.
“I was quite relieved that some of the other taxes proposed were not included in the budget,” he said.
Many of those proposals, however, brought a rain of public outrage as Republicans slammed them amidst legislative wrangling sessions. But the LLC tax was inserted in a broad budget package at the last minute before the budget passed, allowing it to duck the usual vetting in legislative hearings, critics said.
“It was late at night in some back room. There was no morning. There was no hearing. There was no other side,” Blatsos said. “I've closed a lot of loopholes, I wouldn't have closed this one.”
Chandler said while he expected the tax will be implemented, a repeal bid is “gaining steam.” The matter will be hashed out amidst slew of committee review sessions in coming months.
“At least the department realizes what a problem it is,” he said.
Buco chastised critics for turning rule-making hearings in Concord, Plymouth, Berlin and Conway into political forums he said were fraught with “misinformation.”
Blatsos and Chandler said they don't blame the office of DRA commissioner Kevin Clougherty, who they said is just following rules set by lawmakers.
“They didn't pass this law, they're just trying to take something that's very poorly written and make it work,” Blatsos said. “The bad people are the ones who passed it.”
Could cost 600 jobs a year, Blatsos says
By Nate Giarnese
Reporter
nate@conwaydailysun.com
—
The former chief of the state Department of Revenue Administration said a controversial tax hike on limited liability corporations could wipe away 450 to 600 jobs a year in the Granite State, striking sharply at the heart of the state's historic small business advantage.
“Forty-two percent of of all jobs in the state come from small business,” said Philip Blatsos, who worked 30 years for the revenue department and was commissioner from 2001 to 2007.
He said a 5 percent interest and dividends tax being tacked onto distributions made by LLCs and other small businesses forces the owners of mom and pop operations to cut back on hiring as they face troubling uncertainty about the future of tax bills.
Small businesses file as sole proprietorship or LLCs to gain shelter from certain tax and insurance regulations imposed on larger corporations. LLCs, including shop owners and loggers, are prevalent in the North Country.
“They mortgage their house to make payroll for God sakes,” Blatsos told The Conway Daily Sun.
The addition of a dividends tax in many cases triggers an additional 8.5 percent state profits tax to kick in, fueling in reality a much larger and unexpected hike for small business owners, Republicans complain.
Blatsos, representing a pro-business group, attended a final of four public hearings on the tax, during which about 100 came out at Kennett High on Saturday.
It is the result of a legislatively-set DRA administrative rule change last year. It's now under fire by Republicans and business groups as a bid to insert the hikes without a legislative hearing. The rule is expected to be posted in coming days and the tax could take affect in April and be retroactive to January 2009, state Rep. Gene Chandler, R-Bartlett, said.
Blatsos said an increasing New Hampshire tax burden coupled with a sudden uncertainty in the future of the state's commercial tax code threaten to curb economic growth. Small businesses may pull back on expansion while prospective business owners may think twice before moving to New Hampshire, Blatsos said.
“New Hampshire was always very stable as far as taxes,” he said. “We're the best. This is insidious, this is a real danger.”
But an area Democrat said the change simply alters how an existing tax on larger corporations is applied. It was framed by revenue officials as spreading tax equity across small and large businesses, the latter of which already pay an interest and dividends tax, state Rep Tom Buco, D-Conway, said.
Moreover, he said the tax was critical to help the governor close a huge budget gap last year after a slew of other unpopular tax hikes were scrapped.
“The only way to increase revenue is to have these small increases every couple of years in the sources of revenue that we have,” Buco said. “It was presented as a way to close a loophole in the interest and dividends tax.”
The tax targets distributions made by LLCs. That includes payments made to owners or partners beyond what the state decides is beyond reasonable compensation, Republicans complain.
“A large portion of businesses are going to be taxed at 13.5 percent,” state Sen. Jeb Bradley, R-Wolfeboro, said. “In reality it is an income tax on business owners.”
Others insist it is not.
“Most people who have LLCs are not even going to be affected by this,” said Buco. “You don't have to pay tax on your compensation.”
Buco noted other unpopular tax proposals, such as an entertainment tax, were stripped out of the 2010 budget.
“I was quite relieved that some of the other taxes proposed were not included in the budget,” he said.
Many of those proposals, however, brought a rain of public outrage as Republicans slammed them amidst legislative wrangling sessions. But the LLC tax was inserted in a broad budget package at the last minute before the budget passed, allowing it to duck the usual vetting in legislative hearings, critics said.
“It was late at night in some back room. There was no morning. There was no hearing. There was no other side,” Blatsos said. “I've closed a lot of loopholes, I wouldn't have closed this one.”
Chandler said while he expected the tax will be implemented, a repeal bid is “gaining steam.” The matter will be hashed out amidst slew of committee review sessions in coming months.
“At least the department realizes what a problem it is,” he said.
Buco chastised critics for turning rule-making hearings in Concord, Plymouth, Berlin and Conway into political forums he said were fraught with “misinformation.”
Blatsos and Chandler said they don't blame the office of DRA commissioner Kevin Clougherty, who they said is just following rules set by lawmakers.
“They didn't pass this law, they're just trying to take something that's very poorly written and make it work,” Blatsos said. “The bad people are the ones who passed it.”
Wednesday, January 6, 2010
The Fight is Not New to Members of SBSIA. This is a Letter to the DRA Commissioner Telling Him He Was Destroying Small Business.
Commissioner Kevin A. Clougherty
Department of Revenue Administration
P. O. Box 2035
Concord, NH 03302-2035
Dear Commissioner Clougherty,
You’ll be happy to know that one more business has been destroyed by a tobacco tax increase. Therefore, you’ll have less to enforce. It’s a “win-win” for you—our license as a “vending machine operator” is paid through June 30 of 2010. You can let the enforcement guys know over at the Liquor Commission that their attempts at “compliance exercises” are no longer needed at our house anymore—besides, being down to two machines over the last licensing period meant no cigarettes were ever kept at our house. Purchases of our tobacco products were accomplished on the way to stock our machines. Incidentally, a “vending machine operator license” means we didn’t have products available for sale to the general public anyway; we were not licensed for retail.
Our cigarette machines were not able to absorb the new prices, with the taxes imposed by the Federal government and the State of New Hampshire. Quite frankly, since lawmakers and commissioners rarely stand up for their licensed partners in business anymore, it was an easy choice not to replace the older machines with new machines to accomplish the ability to go over $6.00 a pack. We were fairly sure that no one from your department would be there to make sure cigarette vending machines would not be outlawed in the coming years. We stopped buying cigarettes last February. The last empty machine was pulled from its location on May 21.
Incidentally, when you fail to stick up for your licensed businesses, and forget that your department has the additional challenge of being a partner to your licensees, with the implied legislative charge of enabling the growth of said businesses, the end result can be that the state has less money, NOT more for its budget in the coming years. Prior to this business closing, we had a convenience store. Part of the reason we sold that business was to raise the funds to pay the tobacco floor stock tax. You may be interested to know as the taxes rise, sales slow down (particularly for those businesses that are not close to a border state); and since tobacco is not a returnable product for most Independent retailers, that means the “little guys” become “sitting ducks” for further taxes on their dusty, crunchy, “unsellable” and “non-returnable” stock. Since we are not the only business in Concord that has been subject to poor legislative decisions, we remain sure that anyone over in the Sweepstakes Commission can tell you what has happened to sales of lottery tickets in the Concord area, once the tobacco dealers went out of business. Our “out-of-state” buyers replaced their trips to New Hampshire with trips to the Indian Reservations in New York. We are sure that even those mathematically challenged members of your staff, as well as some lawmakers, will understand that a business that sells 2,000 cartons of cigarettes a week does NOT make more for the state by dropping to 35 cartons a week, over the period of less than five years—no matter how many times a cigarette tax is raised. It might be helpful, too, for you as a commissioner, to point out to less enlightened lawmakers, and special interest groups, that less sales of tobacco does NOT mean that more money will be spent on other products in a seller’s store—it means that tobacco customers no longer have any reason whatsoever to shop with that merchant, or possibly come to the state at ALL, and there will BE no associated sales.
Thank you for your time.
Very sincerely yours,
David & Kristie MacNeil
Kristie MacNeil is a Board Member of SBSIA
Department of Revenue Administration
P. O. Box 2035
Concord, NH 03302-2035
Dear Commissioner Clougherty,
You’ll be happy to know that one more business has been destroyed by a tobacco tax increase. Therefore, you’ll have less to enforce. It’s a “win-win” for you—our license as a “vending machine operator” is paid through June 30 of 2010. You can let the enforcement guys know over at the Liquor Commission that their attempts at “compliance exercises” are no longer needed at our house anymore—besides, being down to two machines over the last licensing period meant no cigarettes were ever kept at our house. Purchases of our tobacco products were accomplished on the way to stock our machines. Incidentally, a “vending machine operator license” means we didn’t have products available for sale to the general public anyway; we were not licensed for retail.
Our cigarette machines were not able to absorb the new prices, with the taxes imposed by the Federal government and the State of New Hampshire. Quite frankly, since lawmakers and commissioners rarely stand up for their licensed partners in business anymore, it was an easy choice not to replace the older machines with new machines to accomplish the ability to go over $6.00 a pack. We were fairly sure that no one from your department would be there to make sure cigarette vending machines would not be outlawed in the coming years. We stopped buying cigarettes last February. The last empty machine was pulled from its location on May 21.
Incidentally, when you fail to stick up for your licensed businesses, and forget that your department has the additional challenge of being a partner to your licensees, with the implied legislative charge of enabling the growth of said businesses, the end result can be that the state has less money, NOT more for its budget in the coming years. Prior to this business closing, we had a convenience store. Part of the reason we sold that business was to raise the funds to pay the tobacco floor stock tax. You may be interested to know as the taxes rise, sales slow down (particularly for those businesses that are not close to a border state); and since tobacco is not a returnable product for most Independent retailers, that means the “little guys” become “sitting ducks” for further taxes on their dusty, crunchy, “unsellable” and “non-returnable” stock. Since we are not the only business in Concord that has been subject to poor legislative decisions, we remain sure that anyone over in the Sweepstakes Commission can tell you what has happened to sales of lottery tickets in the Concord area, once the tobacco dealers went out of business. Our “out-of-state” buyers replaced their trips to New Hampshire with trips to the Indian Reservations in New York. We are sure that even those mathematically challenged members of your staff, as well as some lawmakers, will understand that a business that sells 2,000 cartons of cigarettes a week does NOT make more for the state by dropping to 35 cartons a week, over the period of less than five years—no matter how many times a cigarette tax is raised. It might be helpful, too, for you as a commissioner, to point out to less enlightened lawmakers, and special interest groups, that less sales of tobacco does NOT mean that more money will be spent on other products in a seller’s store—it means that tobacco customers no longer have any reason whatsoever to shop with that merchant, or possibly come to the state at ALL, and there will BE no associated sales.
Thank you for your time.
Very sincerely yours,
David & Kristie MacNeil
Kristie MacNeil is a Board Member of SBSIA
Incoming Chair of BIA Claims New LLC Tax "will not put New Hampshire LLCs at a Competitive Disadvantage" Do You Agree?
CORRECTING MISUNDERSTANDINGS ABOUT THE NEW LLC INTEREST AND DIVIDENDS TAX
By Richard A. Samuels
In the waning moments of the 2009 New Hampshire legislative session, the legislature adopted a new revenue generation measure, providing for taxation of certain distributions from limited liability companies to New Hampshire owners. The law will subject the recipient of the distribution to reporting it as a dividend under the New Hampshire Interest and Dividends Tax.
The failure of the legislature to hold public hearings and to fully consider the tax proposal resulted in rushed, sketchy and unclear legislation, and the current public fury over the extension of the I&D tax to LLC and partnership distributions is largely a product of that process. It may well be that many legislators did not fully understand the tax when it was adopted. Nonetheless, it is clear that significant misunderstandings and even misinformation about the tax has been receiving a lot of play in the media.
Prior to the adoption of the new tax law, the New Hampshire Business and Industry Association and the New Hampshire Society of Certified Public Accountants requested clarification from the Department of Revenue Administration as to what the tax would and would not reach. The Department, which had been the source of the legislature’s last-minute inclusion of the tax in the budget bill, provided clarification in the form of detailed letters to the BIA and the CPA Society. The Department has not yet finalized the adoption of administrative rules that are necessary to determine exactly what distributions will and won’t be taxed. However, based on that pre-adoption clarification process, we believe that the following statement of what the tax was and was not intended to reach reflects the intent of the legislature and the Department:
The law is not a new tax. Rather, the change is intended to subject “distribution income” that resembles dividend income to an existing tax, New Hampshire’s Interest and Dividends Tax.
As the Governor has stated, the tax is intended to place businesses that operate as corporations on a par with businesses that operate as limited liability companies. More precisely, the objective of the law was to tax distributions made by limited liability companies and partnerships to their owners to the same degree—and only to the same degree—that dividends paid by corporations to shareholders are taxed as dividends.
The tax will apply to recipients of LLC or partnership distributions, regardless of where the LLCs or partnerships making the distributions are located or under which state’s laws they are formed.
Payments made to owner-employees of LLCs and partnerships that constitute compensation for the services of the owner-employees of the business are not intended to be taxed, any more than compensation paid to shareholder-owners is taxed. The uncertainty over what deductions will be allowed as “reasonable compensation” by the Department of Revenue Administration is a related and significant problem.
We believe that the majority of New Hampshire LLCs, as well as the majority of New Hampshire corporations, are small businesses that do not make distributions to owners in the nature of taxable dividends, so those businesses simply will not be affected by the tax.
Much of the confusion surrounding the new tax is understandable. It is easy to say that LLCs and partnerships should be placed on the same footing as corporations and that distributions or dividends to owners of both should be subject to equivalent taxation under the New Hampshire Interest and Dividends Tax. However, because partnership accounting and partnership tax (LLCs are taxed as partnerships) is very complicated and differs significantly from corporate taxation, figuring out how to treat distributions made by those entities in the same manner as dividends paid by corporations is very complex. Our hope is that the Department of Revenue Administration’s rule-making process will sort that out. Assuming that the rules are adopted so as to effect what we believe to be the law’s intent, we do not believe that the tax will spell an end to New Hampshire LLCs, will not be unfair, and it will not put New Hampshire LLCs at a competitive disadvantage to LLCs operating in other states.
By Richard A. Samuels
In the waning moments of the 2009 New Hampshire legislative session, the legislature adopted a new revenue generation measure, providing for taxation of certain distributions from limited liability companies to New Hampshire owners. The law will subject the recipient of the distribution to reporting it as a dividend under the New Hampshire Interest and Dividends Tax.
The failure of the legislature to hold public hearings and to fully consider the tax proposal resulted in rushed, sketchy and unclear legislation, and the current public fury over the extension of the I&D tax to LLC and partnership distributions is largely a product of that process. It may well be that many legislators did not fully understand the tax when it was adopted. Nonetheless, it is clear that significant misunderstandings and even misinformation about the tax has been receiving a lot of play in the media.
Prior to the adoption of the new tax law, the New Hampshire Business and Industry Association and the New Hampshire Society of Certified Public Accountants requested clarification from the Department of Revenue Administration as to what the tax would and would not reach. The Department, which had been the source of the legislature’s last-minute inclusion of the tax in the budget bill, provided clarification in the form of detailed letters to the BIA and the CPA Society. The Department has not yet finalized the adoption of administrative rules that are necessary to determine exactly what distributions will and won’t be taxed. However, based on that pre-adoption clarification process, we believe that the following statement of what the tax was and was not intended to reach reflects the intent of the legislature and the Department:
The law is not a new tax. Rather, the change is intended to subject “distribution income” that resembles dividend income to an existing tax, New Hampshire’s Interest and Dividends Tax.
As the Governor has stated, the tax is intended to place businesses that operate as corporations on a par with businesses that operate as limited liability companies. More precisely, the objective of the law was to tax distributions made by limited liability companies and partnerships to their owners to the same degree—and only to the same degree—that dividends paid by corporations to shareholders are taxed as dividends.
The tax will apply to recipients of LLC or partnership distributions, regardless of where the LLCs or partnerships making the distributions are located or under which state’s laws they are formed.
Payments made to owner-employees of LLCs and partnerships that constitute compensation for the services of the owner-employees of the business are not intended to be taxed, any more than compensation paid to shareholder-owners is taxed. The uncertainty over what deductions will be allowed as “reasonable compensation” by the Department of Revenue Administration is a related and significant problem.
We believe that the majority of New Hampshire LLCs, as well as the majority of New Hampshire corporations, are small businesses that do not make distributions to owners in the nature of taxable dividends, so those businesses simply will not be affected by the tax.
Much of the confusion surrounding the new tax is understandable. It is easy to say that LLCs and partnerships should be placed on the same footing as corporations and that distributions or dividends to owners of both should be subject to equivalent taxation under the New Hampshire Interest and Dividends Tax. However, because partnership accounting and partnership tax (LLCs are taxed as partnerships) is very complicated and differs significantly from corporate taxation, figuring out how to treat distributions made by those entities in the same manner as dividends paid by corporations is very complex. Our hope is that the Department of Revenue Administration’s rule-making process will sort that out. Assuming that the rules are adopted so as to effect what we believe to be the law’s intent, we do not believe that the tax will spell an end to New Hampshire LLCs, will not be unfair, and it will not put New Hampshire LLCs at a competitive disadvantage to LLCs operating in other states.
BIA Says LLC Tax "best the business community could hope for"
In a letter to Legislators dated June 30, 2009, BIA President Jim Roche expresses BIA's endorsement of the 2010-2011 budget which included the new LLC Tax: "at the end of the day, our support of the budget reflected our belief that it was the best the business community could hope for."
To see the complete letter please email pkaroutas@comcast.net
To see the complete letter please email pkaroutas@comcast.net
Thursday, December 17, 2009
Small Business and Small Industry Association Members Testify Against New Tax on Small Businesses
FOR IMMEDIATE RELEASE
December 16, 2009
Small Business and Small Industry Association Members Testify Against New Tax on Small Businesses
Concord, NH - The Small Business and Small Industry Association (SBSIA) testified today at the Department of Revenue Administration public hearing in opposition to the proposed rules for the new 5% tax on LLCs.
“Small businesses are the economic engine of our economy. It makes no sense to slap a 5% tax on these very businesses that we are depending on to create jobs. We need to create a business environment that helps these businesses grow, not threaten their very survival," said former Senator Bob Clegg and Chairman of the Board of Directors of the Small Business and Small Industry Association.
“In my more than 30 years at the NH Department of Revenue Administration, including my time as Commissioner, I have never seen such a drastic change to our tax system as this new LLC tax that was passed without any public input. In my experience, I never saw a single tax issue that didn’t change or benefit in some way as a direct result of public input during the legislative process. The actions of the Legislature during the 2009 budget process sets a very dangerous precedent,” said Phil Blatsos, former Commissioner of the NH Department of Revenue Administration and member of the Board of Directors of SBSIA.
The Small Business & Small Industry Association (SBSIA) is New Hampshire’s advocate for and the new voice of New Hampshire’s small businesses. Through coalition building and direct contact with legislators and other small businesses throughout the legislative process, SBSIA works to ensure that the economic and regulatory climate in New Hampshire continues to enhance the ability for small businesses to prosper.
###
December 16, 2009
Small Business and Small Industry Association Members Testify Against New Tax on Small Businesses
Concord, NH - The Small Business and Small Industry Association (SBSIA) testified today at the Department of Revenue Administration public hearing in opposition to the proposed rules for the new 5% tax on LLCs.
“Small businesses are the economic engine of our economy. It makes no sense to slap a 5% tax on these very businesses that we are depending on to create jobs. We need to create a business environment that helps these businesses grow, not threaten their very survival," said former Senator Bob Clegg and Chairman of the Board of Directors of the Small Business and Small Industry Association.
“In my more than 30 years at the NH Department of Revenue Administration, including my time as Commissioner, I have never seen such a drastic change to our tax system as this new LLC tax that was passed without any public input. In my experience, I never saw a single tax issue that didn’t change or benefit in some way as a direct result of public input during the legislative process. The actions of the Legislature during the 2009 budget process sets a very dangerous precedent,” said Phil Blatsos, former Commissioner of the NH Department of Revenue Administration and member of the Board of Directors of SBSIA.
The Small Business & Small Industry Association (SBSIA) is New Hampshire’s advocate for and the new voice of New Hampshire’s small businesses. Through coalition building and direct contact with legislators and other small businesses throughout the legislative process, SBSIA works to ensure that the economic and regulatory climate in New Hampshire continues to enhance the ability for small businesses to prosper.
###
Tuesday, December 15, 2009
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.
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.
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