Business Tax Study

Created in the aftermath of the “LLC tax” controversy, the Commission to Study Business Taxes is due to issue an interim report on Dec. 1.

The 12-member commission will hold two public meetings in Concord in the next week — later today and then on Thursday, Oct. 28. The commission is looking at the current system of business taxation in the state with the business enterprise tax, the business profits tax and the interest and dividends tax. The commission, which was proposed by Gov. Lynch in May and formed as part of the Legislature’s final budget bill in June, will also look at how tax rates are allocated among all businesses.

Currently, the business profits tax is 8.5 percent, the business enterprise tax is .75 percent (which is based on a complicated compensation formula), and the interest and dividends tax is 5 percent. The business profits and enterprise taxes make up the largest portion of General Fund revenues in the state budget. For example, through Sept. 30, according to the N.H. Department of Administrative Services, $78 million of the $181 in revenues collected so far in the 2011 budget year comes from those two taxes.

The last-minute implementation at the end of the 2009 legislative session to expand the interest and dividends tax to cover after-tax distributions in LLC, or Limited Liability Company, forms of businesses led to a backlash among small business owners who didn’t understand the tax and called for more public input and legislative research into its impact, fairness and effectiveness.

“A periodic look at every state operation makes sense and that includes our business tax set up,“ said commission member Sen. Bob Odell (R-Lempster) in September. “Taxes should not be so burdensome that businessmen and women look for other states in which to conduct their business. Taxes need to be fair from the standpoint of who pays and how they are collected.”

New Hampshire is the latest state to study its tax system. According to the National Conference of State Legislatures, 37 states have set up one or more tax study commissions since 2000. The commission includes four members from the House, three from the Senate and five public members appointed by the Governor. The commission will also hold five meetings in November before issuing its interim report.

>> The Commission to Study Business Taxes will meet in Room 100 at the State House today, Oct. 22, at 1:30 p.m., and again on Thursday, Oct, 28 at the same time and location.

This Daily Update was written by Michael McCord.

Posted by Hilary Niles on Oct 22 2010. Filed under business taxes, Commerce, industry, jobs & unemployment, Money, small business, taxes, Weekly Briefing, Work. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry