News   |  New Income Tax On Small Business Owners Will Cripple New Hampshire’s Recovery

New Income Tax On Small Business Owners Will Cripple New Hampshire’s Recovery

With over 55,000 people unemployed and hundreds of thousands underemployed, the current leaders of our State are trying to institute a new, Personal Income Tax on 30,000 small business owners in New Hampshire. At a time when even the ultra spending President Obama is suggesting creating small business incentives to spur job growth, our current State Government is trying to institute new taxes in an all out assault against an economic recovery. If passed, these new tax rules will be the most crushing in decades.
Our State is based on small business. It is who we are and how we live, grow and feed our families.
At issue is an attack on New Hampshire small business owners, which, if approved, will send our great State to the back of the pack in its ability to come out of the recession by creating jobs and economic opportunities. The State is now enforcing legislation that allows the Department of Revenue Administration to come into any New Hampshire business and determine whether the owner is making too much money. If so, they will enact additional taxation, that will result in a new 13.5% tax to their personal income. It is the DRA’s sole discretion to determine how much is too much.
The State is trying to impose this new 13.5% tax (through a 5% “Dividends” Tax combined with a 8.5% “Business Profit’s” Tax) on all individuals who own LLC’s and Partnerships in New Hampshire. LLC’s or Limited Liability Corporations, the foundation of New Hampshire small Businesses, are small neighborhood operations that have some legal liability protections similar to “Real” corporations, while being taxed as individual operators. Think of your local convenience store, roofer, car mechanic or restaurant. The “Net Profit” of LLC’s and Partnerships are actually the personal incomes of these operators, and already taxed through the K1 portion of the Federal Tax Return and the Business Enterprise State Tax. It is the State’s intent to “claim” business owners are making too much money and impose taxing the personal income of the estimated 30,000 New Hampshire residents operating these small businesses around our State.
In addition, the State is trying to impose a 5% Personal Income tax on the owners of LLCs or Partnerships that borrow money to grow or expand their business. How will that act help to encourage economic growth and adding employees? As a business owner, if I borrow money or remortgage my property to start a new operation or expand my business, the State feels that it is now entitled to 5% of that mortgage as a tax, claiming that it is actually income and not an investment in my company.
This new Tax isn’t closing a loophole; it’s squeezing the remaining blood from the stone. Our current State Legislators fail to understand that money does not grow on trees. Like a teen with an open hand to their parents’ wallet, they obviously have no understanding where money comes from. They are in fact trying to take the money that should be being used to stop layoffs and to provide raises, health insurance and other benefits.
The Federal Government is not going to pull us out of the recession. We are. Our ability to kick start the New Hampshire economy will come directly from small businesses in New Hampshire who create opportunities that will lead to job growth. Now, more than ever, the State should be doing all in its power to encourage economic growth and job creation, not inhibit it.
If you are concerned about getting a job, or keeping the one you have, please contact your legislator, the Governor or better yet, show up to the public hearing on December 16th in Concord.

Andy Sanborn

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