Tax Soup

Dan Touhy's piece in the Union Leader has the best headline of the day, "State budget writers cook up tax soup"

Other options under scrutiny include a quarter-percentage point increase in the business enterprise tax to raise an extra $30 million a year, suspension of that tax credit against the business profits tax, and a new tax on distribution of profits to members of limited liability companies.

Clougherty said treating LLCs like corporations is a matter of fairness. He said the state could be subject to a legal challenge without it.

"We're trying to level the playing field so that all corporate entities are treated the same," he said. "I'm very concerned about our liability if we are not treating everybody fairly."

Clougherty outlined ways to broaden the tax base. Some ideas would require legislative approval. None of them appear to be shoo-ins for the House and Senate, which must negotiate a final product of the estimated $11.6 billion plan by July 1, the start of the next two-year budget cycle.

Another idea is to capture real estate transfer taxes avoided by certain major businesses and real estate trusts using 501-c status, the Internal Revenue Service code usually designated for charitable organizations. Clougherty said the change, and modifying the definition of "holding company" under state law, would treat business entities consistently. It could also generate nearly $3 million within three years, according to his report.