Former DRA Commissioner Phil Blatsos says that the LLC tax is a major change in tax policy. He says the Interest and Dividends Tax was intended to tax passive income, such as investments. He says the LLC tax hits active income, and amounts to tax on the “sweat equity” that business owners build up through years of hard work.

He also argues that by targeting New Hampshire’s smallest businesses, the DRA will be implementing a tax that it can not administer, aside from the compliance burden placed on the businesses themselves. He says the LLC tax hasn’t been thought out, and that no one yet knows how it will apply to capital gains or other types of businesses. Blatsos says no one knows how this sort of tax on active income will effect investment in those small businesses. The marginal increase in taxes on LLC’s will make them less attractive, and make it harder for them to attract capital for start-up or expansion.

He says that he respects the people at DRA who we worked with for 30 years, and says the fault may lie with the Legislature and the Governor for passing such a poorly thought out tax in the first place.

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