11/01/2007
CONTACT: Ellen Valentino, 410-693-2226 or Jason Brewer, 202-406-4435
NFIB members urge lawmakers not to fund new state spending with higher taxes on small business
ANNAPOLIS, Md. -- Small-business owners testified at the State House the day after Halloween to remind lawmakers of just how scary some of the tax increases being debated in Annapolis would be for small business.
Members of Maryland's leading small-business advocacy group, the National Federation of Independent Business, testified before a joint House and Senate committee to give real-life examples of the financial burden many of the new taxes currently being considered would pose for small business.
"Small-business owners have a unique perspective on the economy and the impact new taxes will have on both their business and their community," said Ellen Valentino, state director of NFIB/Maryland. "Based on their testimony today, it's clear that the overwhelming majority of small businesses will pay a heavy price if legislators choose to fuel more government spending with higher taxes."
No matter what the industry, small-business owners struck familiar themes in their opposition to the proposal to raise the sales tax, expand the sales tax to services and raise the income tax.
"The service tax will hit small employers like me particularly hard," said Michael Kostinsky of Sorrento of Arbutus. "Big corporations have their own marketing teams, human resource staff and in-house accountants, but when I need one of those services I have to hire someone. Under this plan I'll being paying an extra 6 percent every time I hire outside help."
"The tax on services is a kick to the teeth that hits small-business owners disproportionately hard," Kostinsky said.
Patricia Baldwin of Reliable Contracting said the higher income tax would hit her bottom line and force her to rethink plans to hire more employees and expand the business.
"When you raise the income tax you punish small-business owners like me who report business income through our personal income tax returns," Baldwin explained. "But you aren't taking money out of my pocket; you're taking money out of the pocket of the new employee I can no longer hire because I've sent their paycheck to Annapolis."
The higher personal income tax will mean some small-business owners pay higher taxes on their business income than large corporations.
Baldwin said small-business owners in her community were taking a wait-and-see approach to making new investments or hiring new workers in the event higher taxes take a chunk out of their already razor-thin profit margins.
As the debate in Annapolis focuses almost solely on new taxes, small-business owners have questioned the need to raise new taxes without a thorough review of the current budget and state spending.
"Small-business owners want good roads, safe neighborhoods and quality schools," Valentino said. "But they also expect elected officials to balance the state ledger without raiding the tills of small business."
