Wage Proposal Is New Tax on Small Businesses
A proposal for a new tax on many large and small businesses in Connecticut is back. The 2015 proposal is more expansive and expensive than ever.
HB 6791 is a new tax of $1 per hour worked by any employee making less than $15 an hour in businesses with 250 or more employees, or franchisors whose individual franchisees collectively have more than 250 or more employees in the state.
Setting aside that HB 6791 essentially creates two minimum wages in the state, the bill creates so many problems on so many levels that it's difficult to know where to start.
But start we will: HB 6791 will do nothing to make Connecticut’s economy more competitive or encourage employers to locate, stay, and create more jobs here.
Despite its title–An Act Concerning Workers' Wages At Large Corporations–the bill actually is aimed at far more than corporate entities. It supposedly taxes large franchisors, but the reality is, most franchise contracts require the local franchise owner to pay all local taxes.
In Connecticut, most locally owned franchises are small businesses—non-corporate, pass-through entities. What’s more, many of their parent franchisors are located out of state.
So, HB 6791 is really a tax on small business owners in Connecticut.
What kind of message does that send about the state as a place to open a business and create jobs?
The bill also relies on a false belief that everyone working at a big box retailer or franchise restaurant is also receiving state services.
A large portion of that workforce are teens living at home with their parents or guardians; retirees earning extra cash; or people working a second job to augment more substantial income from another job.
Lawmakers should ask themselves: What would be the likely result of such a tax increase on small businesses? It’s not unreasonable to expect fewer jobs, fewer hours worked, or even franchises closing.
Proposals like HB 6791 just add to the perception that Connecticut is not particularly welcome to job creators.
Businesses across the country look at legislation like this and make the choice to grow elsewhere. The result is lost job opportunities for Connecticut citizens, and the loss of good corporate (and non-corporate) citizens that give back to their local communities.
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