JimBJim Bouchard is author and founder of Dynamic Components of Personal Power, and the founder of Northern Chi Martial Arts Centers. Jim combines his experience as a professional martial artist, entrepreneur and speaker to share his philosophy on power for personal and professional success.
entry 7 of 87 < previous | next >
Dangerous Taxation for Small Business
May 10, 2009 03:58 PM
Categories: Government at Work Town: Brunswick
LD 1088 is still in play, LD 1314 is a close cousin. These bills are well-intended attempts to reduce Maine’s income tax rate. I’m not questioning the intention; I’m pointing out the dangers to small and micro-businesses. You can’t eat intentions.
LD 1288 proposes simply lowering the income tax and corporate tax rates over a number of years to attract new business which should in turn expand the income tax roles as we create new jobs. Could it be that this bill is simply too logical to win support?
The sponsors of 1088 and 1314 are attempting a balancing act. To lower the income tax rate, they’re expanding the sales tax to “amusements & recreation”, membership businesses and other service sectors. The language in each of these bills can be vague and open to broad interpretation.
Here’s the problem: many very small businesses are running on extremely tight margins. They’ve borrowed against their homes and assets to whether the recession and other local economic conditions like the base closing in Brunswick and lay-offs at LL Bean and across the state. Many entrepreneurs have laid-off employees and many have stopped paying themselves in order to keep the business alive; others have already decided to cut their loses and close.
Nearly all businesses, large and small have already lowered prices and rates to adjust to a contraction in consumer spending, particularly in areas that depend on discretionary spending like restaurants, fitness and tourism based businesses.
What do you do when you’ve already lowered your prices to a level that erases your margin, then the state levies a 5% tax on your services? What will you do? I network with many small and micro-entrepreneurs who already anticipate adjusting again to offset all or part of this tax increase.
The result is that a business with little or no margin will lower rates to keep or attract customers who are already spending less. The net result is that the labor of that entrepreneur is taxed directly; if you’re an entrepreneur you’re effectively paying the tax out of your own pocket.
Ironically, the state has already prohibited restaurants from advertising that they’ll “pay” any increased tax on meals; they can’t even gain marketing leverage from the anticipated cut to their revenues from increased taxation.
Most small business people file taxes as either a sole proprietor, S-Corp or LLC. The profits from each of these entities “passes through” to the owner. Expanding the sales tax to service sectors, recreation and amusements will likely result in lower income tax revenues than anticipated due to simply lowering the income tax rate.
Will your business be affected by the proposed expansion of taxes? As I’ve been presenting and networking around the state I’ve been very surprised by the number of business people who are simply unaware of the proposed changes or don’t think it will affect their business.
You better find out if you’ve got a dog in this fight…and quick!
As I said, some of the language is extremely confusing. As of this writing I’ve tried diligently to get some clarification, but I haven’t had much luck as yet.
In the spirit of full disclosure, I do have a couple of dogs in this fight. I still run a small martial arts center in Brunswick. The language of the LD 1088 includes “gymnasiums” in the expanded sales tax profile. 1314 includes all “athletic” and membership based activities. If you run a fitness center, do personal training, teach martial arts, yoga Pilates or dance you better pay attention.
Not only do I have an issue with expanding taxes on businesses already suffering from economic conditions and contracted consumer spending, but I’m wondering why we’re imposing a tax on people who are trying to stay healthy? With the public outcry for health care reform, how does it make any sense to make fitness more expensive? I don’t know if an ounce of prevention is actually worth a pound of cure, but I do know that every dollar spent on fitness returns six dollars in reduced health care costs, sick time and insurance expenses. Taxing any fitness activities, including those considered so-called “amusement and recreation” is insane. It would make more sense to make it more cost-effective for people to get in the gym, the dojo, the dance studio, on the golf course and on the ski slopes!
My other business includes seminars and “lectures” as specified in these pending bills. Are you a consultant or business trainer? Do you charge for seminars, training events or classes? Pay attention!
If you’re concerned about the application of these expanded taxes now is the time to do something. LD 1088 and LD 1314 are moving forward; one of them is likely to pass unless there is vocal and enthusiastic public opposition. Once passed, it would require a monumental effort to reverse this action. If you think LD 1288 makes some sense, now is the time to show your support.
State Senator Stan Gerzovsky of Brunswick is hosting a public forum at the Kresge Auditorium at Bowdoin College on Saturday, May 16th at 10 am. Write, call or email your Representative and Senator…hell, write to all of ‘em!
All you need to do to make your opinion known is click here and start sending messages! An hour of your time may just save your business.
The philosophy I teach through my Think Like a Black Belt program and my book, Dynamic Components of Personal POWER is one of action rooted in personal responsibility. When this moment passes there will be those who took action and those who waited on the sidelines. You can't afford to sit this one out!
Best thoughts for success & happiness!
Here’s some light reading for you! Don’t freak out if you’ve never tried to read proposed legislation before; just scroll to the bottom of each bill for a summary:
LD 1088
LD 1314
LD 1288
Jim Bouchard is America’s Black Belt POWERVATOR and a resident of Brunswick, Maine.
Jim is presenting a two-part seminar for entrepreneurs at the Western Maine University and Community College Center in South Paris on June 23rd. Click here for more information!
LD 1288 proposes simply lowering the income tax and corporate tax rates over a number of years to attract new business which should in turn expand the income tax roles as we create new jobs. Could it be that this bill is simply too logical to win support?
The sponsors of 1088 and 1314 are attempting a balancing act. To lower the income tax rate, they’re expanding the sales tax to “amusements & recreation”, membership businesses and other service sectors. The language in each of these bills can be vague and open to broad interpretation.
Here’s the problem: many very small businesses are running on extremely tight margins. They’ve borrowed against their homes and assets to whether the recession and other local economic conditions like the base closing in Brunswick and lay-offs at LL Bean and across the state. Many entrepreneurs have laid-off employees and many have stopped paying themselves in order to keep the business alive; others have already decided to cut their loses and close.
Nearly all businesses, large and small have already lowered prices and rates to adjust to a contraction in consumer spending, particularly in areas that depend on discretionary spending like restaurants, fitness and tourism based businesses.
What do you do when you’ve already lowered your prices to a level that erases your margin, then the state levies a 5% tax on your services? What will you do? I network with many small and micro-entrepreneurs who already anticipate adjusting again to offset all or part of this tax increase.
The result is that a business with little or no margin will lower rates to keep or attract customers who are already spending less. The net result is that the labor of that entrepreneur is taxed directly; if you’re an entrepreneur you’re effectively paying the tax out of your own pocket.
Ironically, the state has already prohibited restaurants from advertising that they’ll “pay” any increased tax on meals; they can’t even gain marketing leverage from the anticipated cut to their revenues from increased taxation.
Most small business people file taxes as either a sole proprietor, S-Corp or LLC. The profits from each of these entities “passes through” to the owner. Expanding the sales tax to service sectors, recreation and amusements will likely result in lower income tax revenues than anticipated due to simply lowering the income tax rate.
Will your business be affected by the proposed expansion of taxes? As I’ve been presenting and networking around the state I’ve been very surprised by the number of business people who are simply unaware of the proposed changes or don’t think it will affect their business.
You better find out if you’ve got a dog in this fight…and quick!
As I said, some of the language is extremely confusing. As of this writing I’ve tried diligently to get some clarification, but I haven’t had much luck as yet.
In the spirit of full disclosure, I do have a couple of dogs in this fight. I still run a small martial arts center in Brunswick. The language of the LD 1088 includes “gymnasiums” in the expanded sales tax profile. 1314 includes all “athletic” and membership based activities. If you run a fitness center, do personal training, teach martial arts, yoga Pilates or dance you better pay attention.
Not only do I have an issue with expanding taxes on businesses already suffering from economic conditions and contracted consumer spending, but I’m wondering why we’re imposing a tax on people who are trying to stay healthy? With the public outcry for health care reform, how does it make any sense to make fitness more expensive? I don’t know if an ounce of prevention is actually worth a pound of cure, but I do know that every dollar spent on fitness returns six dollars in reduced health care costs, sick time and insurance expenses. Taxing any fitness activities, including those considered so-called “amusement and recreation” is insane. It would make more sense to make it more cost-effective for people to get in the gym, the dojo, the dance studio, on the golf course and on the ski slopes!
My other business includes seminars and “lectures” as specified in these pending bills. Are you a consultant or business trainer? Do you charge for seminars, training events or classes? Pay attention!
If you’re concerned about the application of these expanded taxes now is the time to do something. LD 1088 and LD 1314 are moving forward; one of them is likely to pass unless there is vocal and enthusiastic public opposition. Once passed, it would require a monumental effort to reverse this action. If you think LD 1288 makes some sense, now is the time to show your support.
State Senator Stan Gerzovsky of Brunswick is hosting a public forum at the Kresge Auditorium at Bowdoin College on Saturday, May 16th at 10 am. Write, call or email your Representative and Senator…hell, write to all of ‘em!
All you need to do to make your opinion known is click here and start sending messages! An hour of your time may just save your business.
The philosophy I teach through my Think Like a Black Belt program and my book, Dynamic Components of Personal POWER is one of action rooted in personal responsibility. When this moment passes there will be those who took action and those who waited on the sidelines. You can't afford to sit this one out!
Best thoughts for success & happiness!
Here’s some light reading for you! Don’t freak out if you’ve never tried to read proposed legislation before; just scroll to the bottom of each bill for a summary:
LD 1088
LD 1314
LD 1288
Jim Bouchard is America’s Black Belt POWERVATOR and a resident of Brunswick, Maine.
Jim is presenting a two-part seminar for entrepreneurs at the Western Maine University and Community College Center in South Paris on June 23rd. Click here for more information!
AMF
entry 7 of 87 < previous | next >
1 Comment: