Commerce Committee

JOINT FAVORABLE REPORT

Bill No.:

SB-400

Title:

AN ACT ELIMINATING THE BUSINESS ENTITY TAX.

Vote Date:

3/11/2008

Vote Action:

Joint Favorable Change of Reference to Finance, Revenue and Bonding

PH Date:

3/6/2008

File No.:

SPONSORS OF BILL:

Commerce Committee

REASONS FOR BILL:

This bill would eliminate the $250 dollar business entity tax which applies to limited liability companies, limited liability partnerships, limited partnerships, and S corporations.

RESPONSE FROM ADMINISTRATION/AGENCY:

Honorable Robert R. Simmons, Connecticut Business Advocate, Office of The Business Advocate.

Mr. Simmons testified in support of this bill calling for complete repeal of the Business Entity Tax. In his site visits with many Small and micro businesses he testified that this tax is far and away the most disliked and often referred to as a 'nuisance tax'. In Closing Mr. Simmons states that we are sending the wrong message to businesses and this bill would have an immediate positive impact for the business community.

State Representative Kevin Delgobbo, House Republican Caucus

Representative Delgobbo testified in support of this bill stating that since it was first enacted the House Republican Caucus has supported its elimination and is please that this year the Democrat Leadership and the Secretary of the State are also in favor of getting rid of this tax. Rep. Delgobbo stated that this is a nuisance tax, and it reflects an attitude that we as a state have toward existing and prospective businesses. In closing he stated that he hopes the new-found support of leadership for eliminating this tax is a sign that we are beginning to change that attitude.

Susan Bysiewicz, Secretary of State CT

Secretary Bysiewicz testified is support of this bill and commended the leadership to raise this legislation. Secretary Bysiewicz also stated that as the state's Chief Business Registrar she travels across the state meeting with businesses about their concerns and suggestions to create a more business-friendly environment in Connecticut. Time and time again she is hearing that the elimination of the Business Entity Tax is one step toward reaching that goal. In closing she stated that the time is now to send a good message to our business community.

State Senator David Cappiello, Twenty-Fourth Senate District

Senator Cappiello submitted testimony in favor of this bill stating that this tax was designed to be a “Temporary Tax” to fill a budget gap in 2002 and has now become permanent. Sen. Cappiello also stated that new businesses need every dollar and this tax can be devastating and it's sending the wrong message.

State Senator John Kissel, Seventh Senate District.

Senator Kissel testified in support of the bill stating that he believes this is an important measure for the legislature to take, especially at a period in history when our economy is facing significant difficulties and the overhead costs of running a business are increasing on a seemingly weekly basis. Sen. Kissel stated that just recently he held a forum for business leaders in his district who all repeatedly stated that the tax in cumbersome and without merit. In closing he would urged the committees favorable vote and passage of the bill.

State Representative Ed Jutila, 37th Assembly District.

Rep. Jutila testified in support of this bill stating that when he first took office in 2005, this was the first bill he introduced and is pleased to see the bipartisan support or would hope for a favorable vote out of the committee.

Joan McDonald, Commissioner, Department of Economic and Community Development

Commissioner McDonald testified that DECD is in support of this legislation to repeal it in its entirety. In her testimony she stated that this tax deters small businesses from growing in Connecticut and eliminating this fee can mean other investments by a small business.

The Permanent Commission on the Status of Women

The Commission also submitted testimony in support of this legislation.

NATURE AND SOURCES OF SUPPORT:

Bonnie Stewart, Vice President of Government Affairs, Connecticut Business & Industry Association.

Peter D. Papas, Director of Mitchell College Center for Entrepreneurship

Kristi Soli, President, Evale' Innovations

Nick Fanelli, CLU, CPCU, CIC, President, Raynard & Peirce Inc.

Donald Carey, Owner, Sunrise Homes Corporation

Maria Keiser, Owner, The Small Business Network.

Barbara Slocum, Owner, General Data Services, LLC

Al Phillips, Owner, Progressive Management Consulting, LLC

Mary Ellen Dombrowski, Executive Director, Glastonbury Chamber of Commerce

The Greater Danbury Chamber of Commerce

The Milford Chamber of Commerce

The Northwest Connecticut Chamber of Commerce

The Quinnipiac Chamber of Commerce

The Connecticut Coalition Of Property Owners

The Connecticut Association of Mortgage Brokers

The Connecticut Messenger Courier Association

The Lumber Dealers' Association of Connecticut

Bill Brice, Owner of Professional Investors, LLC, ProEast Asset Management, LLC, ProEast Tax Preperation Services, LLC, Grey Rock Properties,LLC, Red Rock Properties, LLC

Brenda Koboski, BBK Accounting

Shirley Bloethe, Owner Of 3 small LLCs

Lorna M Bolduc, Owner, Accrete Group, LLC

The Independent Electrical Contractors Of New England, Inc

The Connecticut Self Storage Association

Connecticut Association of Plumbing, Heating & Cooling Contractors

Robert McVeigh, President, Connecticut Alarm & Systems Integrators Association

Denise Carter, President, East Of The River Chambers Of Commerce Association

National Federation Of Independent Business

Jean Dunning and Karen Gumkowski, Owners, JK Designs

Each individual or organization submitted testimony to fully support passage of this legislation and would urge a favorable vote.

NATURE AND SOURCES OF OPPOSITION:

Shelly Geballe, JD, MPH, President, Connecticut Voices For Children

Mrs. Geballe testified in opposition to this bill stating that even for genuinely small operating business a tax equal to $20.83/ per month is not necessarily excessive. She also stated in her testimony that this tax is not anti- competitive and is actually more modest than comparable taxes in neighboring states. Mrs. Geballe would urge the Committee to oppose this legislation.

Lucy Nolan, Chair, One Connecticut

Mrs. Nolan in her testimony stated that eliminating the Business Entity tax is not the most effective stimulus for the economy or way to create growth. She also states that leaving a 35 million dollar hole in the budget will not help Connecticut's residents, or their businesses. In Closing she stated that she would urge the committee to oppose this legislation.

Paul Filson, Director, Service Employees International Union (SEIU)

Mr. Filson stated that rather than eliminating the entity tax the General Assembly should either consider instituting a truly progressive tax policy with transparency on businesses. Mr. Filson would also urge the opposition.

Reported by: Sean Brittell

Date: 03/19/08