State Rep. Gomberg: Lower taxes for small businesses so they don’t pay a higher rate than the big boys
Gomberg Seeks Tax Adjustment to Benefit Small Business
State Representative David Gomberg has announced plans to introduce a bill during the February, 2014 legislative session to adjust small business tax cuts approved during the recent “Grand Bargain” Special Session. The business tax cut lets owners of limited liability companies, S-corporations, and partnerships pay a lower income tax rate on their profits.
“I own a small business.” said Gomberg. “ In Oregon, our smallest, job creating enterprises pay a minimum tax of 9%. Our largest firms pay 7%. And that difference is fundamentally unfair. I represent many of those small businesses and voted in favor of the tax adjustment despite its flaws.”
Those flaws, according to Gomberg, include a requirement that firms hire at least one employee for an average of 30 hours a week and 1200 total hours per year. “That 30 hour requirement will exclude many working parents, part-time working seniors, and seasonal businesses that we see here at the coast or in the agricultural community.”
Of the nearly 80,000 S-corporation tax returns affected by the changes, half of them –half – report income of under $25,000. Those tax filers will receive a benefit of about $140. “When a micro business makes a few bucks, they don’t bank it. They spend the money, usually investing in trying to grow the company. Their purchases create more customers for neighboring businesses.”
Taxpayers reporting more than $1 million in annual income amount to roughly 250 returns statewide.
Gomberg criticized tax breaks for millionaires when the savings amount to more than the average annual income in his district. “Those 250 millionaires will save about $40,000 a year. But capping the benefit at $250,000 of income will focus the program on smaller and growing firms that really do create jobs. It will save the state about $20 million a year by limiting the tax break for our largest S-corporations. And it will solve the significant problem of no longer encouraging other high-income taxpayers to change their status to qualify for the lower rate – an unintended consequence that may cost millions of dollars.”
Gomberg concluded, “Small businesses use their creativity and economic courage to generate 65% of Oregon’s new jobs. They should not be paying higher tax rates than large companies. The Small Business Tax Break was too big a move in the right direction. We need some appropriate and well-thought-out tweaks to focus the benefit where it is needed, where it is deserved, and where it will have the most benefit for all Oregonians.”
David Gomberg represents House District 10 on the Central Coast. In his first term, he serves on the House Small Business Task Force. To subscribe to his legislative newsletter, send an email to firstname.lastname@example.org