State Rep. John Kowalko’s legislation to raise the annual fee for limited liability companies comes as no big surprise.
Over the years, the cantankerous Democrat has focused on raising taxes for the wealthy and businesses under the guise of providing a fairer deal for individuals and mom and pop enterprises.
Kowalko seems to think that businesses, many owned by people with modest incomes, have unlimited resources and no other options.
This time around, the state rep from Newark has focused on adding top rates for the wealthiest taxpayers, throwing in a tiny downward bump for those with modest incomes, and tacking on a little-noticed bill tacking on an extra $50 a year to the annual fee for limited liability companies.
The argument is that the extra $40 million or so would compensate for cuts in public school budgets as the state copes with a budget deficit that is close to $400 million, a massive amount for a state of 950,000 souls.
Already on the table are tax hikes for the biggest companies and a higher rate of the personal income tax, higher cigarette and alcohol taxes, etc.
This time around, Kowalko is asking mom and pop businesses to dig deeper with the LLC fee, which offers even one-person firms the assurance of being part of a corporate-savvy legal system that includes Chancery Court.
The state currently charges $300 a year, higher than in neighboring states. The danger is that even a $50 bump will lead small businesses to incorporate elsewhere.
Meanwhile, the effects of a corporate cost-cutting of jobs paying in the low six figures will keep tax revenues on the sluggish side.
The job cuts that typically occur in research and mid-management will keep income tax revenues flat and leave the governor and General Assembly looking under the couch cushions for money.
