Time to stand on my tax soap box once again! :-)Forget about what you are hearing about small business tax cuts in political talking points this year, our taxes have actually gone up substantially and it's only the middle of February.
So far we've received two (of many to come) new tax assessment rates for 2010, both big increases:
1) The first is on our building in the form of county real estate taxes. Frederick county has devised a devious plan to deal with falling commercial property values in our area - while the assessed value of our building fell by $22,000 this tax year, the county TRIPLED the assessed value of the parcel of land the building is built on (from $42,000 to $146,000 - which is ridiculous and probably based on commercial land sales from back in 2005/2006 when people were being crazy). This increased our property tax bill about $1,200 for the year. The total assessment is now way out of sink with actual property values, and I would estimate that the county is now valuing our warehouse at maybe $150,000 more than the actual market value. We're going to appeal the new assessment, but we've never gotten far with that in the past.
2) The second increase is a BIG one. CNN recently ran an article about how businesses are getting walloped by unemployment tax increases.
"Companies in at least 35 states will have to fork over more in unemployment insurance taxes this year, according to the National Association of State Workforce Agencies.
The median increase will be 27.5%. And employers in places such as Hawaii and Florida could see levies skyrocket more than ten-fold.
Many of these hikes happened automatically as prolonged joblessness triggered state laws governing their unemployment insurance systems. But at least seven states voted to raise their taxable wage bases, the level of income subject to unemployment tax. And another 10 are looking at upping the wage bases or tax rates.
The states are scrambling to restore their unemployment insurance trust funds, which cover claims.
State trust funds have been decimated by the Great Recession, forcing a record 26 states to borrow a total of more than $30 billion from the federal government. The numbers are expected to grow to 40 states borrowing $90 billion by 2012, said George Wentworth, policy analyst at the National Employment Law Project.
"States are going to be facing higher unemployment tax rates for some period of time," Wentworth said."
Well, we got hit by that one this year too. In late December we got a letter for the state of Virgina letting us know that our unemployment tax rate, which we pay as part of OUR payroll tax contribution for every employee, was going up about 2.5x.
The letter stated that the states unemployment fun is running dry, and a substantial increase was needed to maintain the health of the fund. Most people probably think the Federal Government pays for most of those benefits, but the majority actually come out of state unemployment pools funded by businesses through a payroll tax, and when the Feds do mandate unemployment benefit extensions they are actually authorizing Federal loans to the state pools that have to be paid back in the future.
So this increase translated into a $6,800 annual increase in our state unemployment tax contribution this year. Even more problematic is that the state front loads this tax assessment every year, meaning instead of paying equal installments of the tax throughout the year, they front load the entire amount across the first 4 months of annual payrolls, so we have to fully fund this tax in our payrolls between January and April. We run two payrolls a month, so for the first 8 payrolls this year we have to pay an extra $850 each time in additional unemployment taxes. Imagine if the Fed estimated your total annual withholding tax, and then took it all out of your paycheck over just 4 months. Ouch.
Anyway, I totally understand that things are tough and a lot of folks are out of work and need these extended benefits, but just remember who's really paying those bills...
4 comments:
Thanks for expressing your frustration w/o randomly pointing fingers or using name calling like I've seen others do in various corners of the net.
You do a good thing for the anime community and I hope I can do my part to show support this year.
Hm, that reminds me... there are some releases coming up that I need to pre-order
It's a good thing you're a rich fatcat who'd probably blow it all in Vegas if the government didn't tax you first right Mr. Brown? ;)
Oh yeah, that's big sarcasm from me. None of these idiots in power right now understand how business works. They think they can just tax everyone and jobs will spontaneously generate at some point down the road. The government says we the people are too stupid to be trusted with our own wealth so it's time to take it and spread it around.
I used to be just conservative but now I think I may be becoming an anarchist. The system is just so broken. And not just for business, property and sales taxes are up all over the place. My family is paying more for food, gas, tax bills, utilities and it's only going to get worse. (Although all the new bankruptcies are helping my Dad's law practice. Saving someone from debt collectors and repo men feels good though.)
The international community is talking about introducing GLOBAL taxes now on banks, like this won't have dramatically bad effects? Big new taxes are planned to drive up utilities because of global warming (yet every week there seems to be a new "inaccuracy" found in the scientific reports) and of course anyone productive enough to have money right now is getting hosed more and more.
The government creates this problem and now are working to "fix" it in such a way that it almost guarantees things get even worse. They just refuse to accept that the system they've put in place isn't sustainable. You can't just take and take from the productive people in society and then spend more than you take and expect to be able to just tale more forever.
I wish you luck with that tax assessment Robert. God help you and may someone save us from the fools in government before things get so bad they explode.
Wow! As an AP Government student, I do find this interesting (it's not just "retailer angst" to me ^^) You'd think that they'd try to spare the small businesses, most of which are suffering more than big corporations... Oh well. You guys can probably make it through this alright; you have devoted customers and are reputable. Hopefully they'll remember to repeal those taxes after the economy recovers... :P
Carly, no matter how much the reps talk about "small business", the actual, working government will always favor two groups: the connected, and large business.
The connected for obvious reasons - the guys doing things for a government agency know people, and vice versa; that knowledge represents a comparative advantage which the connected will *inevitably* exploit.
Large business, on the other hand, is easier to deal with from the view-point of the impartial bureaucracy. Large business has its own bureaucracy, and the two sets of bureaucrats are naturally more likely to coordinate and communicate with each other. Big government likes big business, and vice versa, because they exist on the same level.
The best political friend of small business is as little government as is compatible with public order & the enforcement of contracts. Which is not to say that the best political friend of society in general is likewise minimal government, btw. I'm no minarchist; there's plenty of small businessmen who get up to all sorts of negative-externality shenanigans. We were just talking last night about the hunting-preserve yahoo a couple counties to the west of us up here in Central PA who has gifted us all with a dangerous infestation of Tennessee Wild Boar.
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