Gov. Rendell's Capital Stock Franchise, Health Care Premium & Personal Income Tax increases: Small Business Impact

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bobguzzardi's picture
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I was not aware of these other proposed tax increases which this National Federation of Independent Business member calculates to cost ten times what Governor Rendell and spending proponents and calculates that "All totaled, this typical small company would see their tax burden increase almost $26,000 over five years."

This is staggering amount to take from a productive real world business that produces real goods or provides real services. Pulling money from businesses reduces goods produced, services provided and people employed. Profits pay people. Taxes take profits that pay people and can be invested for future production.

Rendell’s Tax Increases: Capital Stock & Franchise: Health Care Premium; Personal Income

NFIB member Hudak says Gov. Rendell underestimates impact of tax proposals on small businesses
During an appearance last week on public television, Gov. Ed Rendell said his proposal to raise the Personal Income Tax rate by 16 percent would only cost a typical small business $10 per week, or roughly $520 per year. NFIB member Warren Hudak took issue with the governor's assessment, reporting to lawmakers the real cost of all of the tax increase proposals on a typical small business was 10 times the governor's estimate.
In addition to the 16 percent increase in the PIT, Gov. Rendell is proposing to retroactively raise the Capital Stock and Franchise tax rate to 2.89 mills for 2009, and lock-in that higher rate for three years-a $ 2 billion tax increase. The governor is also proposing a 2 percent tax on health insurance premiums.
Hudak, who owns a Harrisburg-based payroll and accounting firm, prepared for lawmakers and the media a real-world example of an actual Subchapter-S firm with 17 workers and gross sales of $784,000 and a payroll of $384,252. The two owners each earn take-home salaries of $45,000.
All totaled, this typical small company would see their tax burden increase almost $26,000 over five years.
The PIT would take away $1,741 in taxes on salaries per year and $1,044 in taxes on money available for investment per year. The retroactive increase and postponed phase-out of the Capital Stock and Franchise tax would take away an additional $1,290 in taxes in year one and cost nearly $11,200 over five years. The proposed 2-percent tax on health insurance premiums would take away an additional $720 per year.

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