Marcy Vierzen's Letter to Legislators

Greetings...

I have been in contact with most of you regarding my stance regarding the LLC tax; this tax on LLCs, voted in by state legislators, will have a very negative impact on small business throughout the state of New Hampshire, and is no less than an income tax, with the burden carried by Main Street, NH businesses. I have sent the below letter out to state representatives in New Hampshire, as well as the Governor, stating my stance against the LLC tax which was recently voted into law. As well, I have submitted a shortened version to the Concord Monitor, and will continue to do so with other New Hampshire papers. Please see a list of local state reps at the bottom, and contact them to urge them to repeal this LLC tax. The public forum for this (after the fact, of course), will be this Wednesday, the 16th, at 10am at 109 Pleasant Street in Concord. Please feel free to contact me at any time if you have any questions, as I have spent a great deal of time researching this matter. Remember, if we do NOT make our voices heard as small businesses, we will absolutely end up paying the price for our silence. In this busy holiday season, please take the time to contact your local state rep, and let them know your thoughts on this law, and the impact it will have on your small business, or that of someone you know.

Marcy LB Vierzen, Owner
ARTISAN'S NEW LONDON, LLC, New London, NH

Dear Representative _______________:

I am the owner of an LLC in New London, NH. As a citizen of New Hampshire, I am very upset about the law which was passed by state legislators, and includes taxation of LLCs. This tax will undoubtedly impact small businesses throughout New Hampshire in a negative and large way, and I urge you to repeal it.

Here’s why:

1.)  The process by which the LLC tax was made into law exemplified a poor political process. Any item, particularly one of such magnitude, which is slipped into a bill at the “11^th hour” without “due process” of public discussion and review epitomizes, plain and simple, “dirty politics”. I am uninterested in rhetoric, nor am I interested in the justification that this is simply “part of the process”; particularly NOT for something where the magnitude of impact will be so large for owners of small independently owned businesses throughout the state of New Hampshire. If this was a legitimate line item, it could have, and should have, gone through a process of review and discussion, with the opportunity for a public hearing. This allows for transparency for, and trust from, the citizens of New Hampshire. This is a standard I hold all politicians to, no matter what their party affiliation is.

2.)  If, as legislators say, they are attempting to “even the playing field” by making sure that all businesses, not just corporations, pay the 5% tax recently made into law, then why should an individual as a sole proprietor, NOT organized as an LLC, be exempt from this, when a single member LLC is not?

3.)  This is an income tax. In order to collect taxes on monies earned by owners of LLCs, NH has placed a cap on compensation, taxing anything over the cap they have dictated as appropriate. However, the basis for this cap is arbitrary, because it is based on W-2s, which LLC members are NOT eligible for. These “caps” do not take into account the many factors innate to LLCs, which differentiate them from their valued W-2 employees (i.e. the financial risk in the start-up and maintenance of a small business, the time, creativity and drive it takes to be self-employed), and again, are therefore arbitrary at best.

4.) Unlike the single member of an LLC, employees of LLCs have no “cap” on compensation, and therefore, no “income tax” liability under this new law. The owner is held to an entirely different standard, as the “cap” for compensation for them will, in many instances, be far less than the salary earned by their W-2 employees. Again, the employee may exceed the amount NH has set for their profession, and have no tax liability under this law. This tax burden falls exclusively on the shoulders of the LLC employer.

5.)  The ACTUAL tax on net business profits is 13.5%, not 5%! There is already a tax in place which dictates that net business profits are taxed at 8.5%. By limiting the amount of compensation that a business owner can take, you are in fact subjecting their earnings to a.) An 8.5% income tax to be followed by b.) An additional 5% income tax on those same earnings.

6.)  I fully understand that in this difficult economic time, everyone needs to make certain concessions. However, if I ran my business the way that the legislators in New Hampshire are running our state’s budgets, I would simply be “out of business” and be referred to as fiscally irresponsible. This tax specifically targets Main Street, NH, and is not spread evenly across the state populace. Aside from the financial risk innate in creating and building a small business, small business owners have already been deeply impacted by this difficult economy (often relinquishing compensation, endless time, and energy in the interest of maintenance and/or growth of their LLCs).

No matter what kind of political or legal rhetoric state legislators may attempt to use to justify this new law, the citizens of New Hampshire are far too intelligent to call this anything other than in “income tax.” Very unfortunately, NH’s Democrats have placed the burden of that income tax exclusively and squarely on the shoulders of small business owners throughout the state of New Hampshire.