Opportunity to Finally Repeal Business Entity Tax
In 2002, lawmakers hit Connecticut’s small businesses with the Business Entity Tax, a $250 levy imposed to help balance that year’s state budget deficit.
It was essentially a tax for existing in Connecticut—regardless of whether those businesses were profitable.
The legislature’s Finance, Revenue, and Bonding Committee was scheduled to hear testimony on the bill March 17.
In submitted testimony, CBIA Counsel Louise DiCocco urged lawmakers to repeal the tax, which was supposed to sunset years ago.
DiCocco said that 15 years after its passage, the tax continues to irritate Connecticut’s small businesses—on top of the many other taxes and fees they already pay in Connecticut.
These include costs associated with state and local permits, and licenses related to the business, plus sales taxes for goods and services.
There are also property and personal income taxes—taxes and fees that are considerably higher than most other states, she said.
CBIA represents thousands of businesses, the vast majority of which have 25 or fewer employees.
“Businesses in Connecticut have been burdened by regulatory issues and unnecessary taxes for too long,” DiCocco said.
She cited a recent study from the Tax Foundation that ranked Connecticut second in the nation for state and local tax burdens as a percentage of state income.
Fifteen years after its passage, the tax continues to irritate Connecticut’s small businesses.
DiCocco urged lawmakers to repeal the tax.
“While some may suggest it is a ‘nominal’ fee, to most small business owners operating on very thin profit margins, putting the $250 back in their checkbook would be more than welcome and useful,” DiCocco said.
“For a small business, it could pay for a monthly utility bill, or purchase a new printer, or piece of office equipment.
“Beyond the cost savings, repealing the Business Entity Tax would be notable for the message that it sends to small businesses in Connecticut and outside our state as well— that Connecticut is open and welcomes small businesses.”
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