Tax Tyranny

The reformed franchise tax as proposed, would replace the current corporate franchise (which levies the lesser of a 4.5 percent tax on income or a 2.5 percent tax on equity) with a 1.0 percent tax on the gross margin of all “limited liability businesses”. This justification for state taxation originated with legal limited liability of corporations, which is now proposed to be joined by other types of limited liability businesses, such as limited partnerships, limited liability partnerships, professional associations, and business trusts. Exempted would be sole proprietorships; businesses with less than $300,000 total revenues (indexed for inflation) versus $150,000 at present; passive unincorporated investment entities, and not-for-profits.