CONCORD — House and Senate negotiators reached agreement Wednesday on the two major business tax bills this session.
One bill would change how closely held companies such as sole proprietorships or limited liability companies are taxed when they receive an infusion of cash, such as an initial public offering or investment capital.
And the other bill, Senate Bill 235, would increase the amount companies can deduct for one-time capital expenditures.
“The support of these two bills today builds on our long record of incentivizing business to grow, expand, and create jobs in our state,” said the Senate’s chief negotiator, Sen. Jeb Bradley, R-Wolfeboro, “while ensuring that prospective new business owners know that New Hampshire is open and supportive of business.”
But conference committee member Sen. Andy Sanborn, R-Bedford, chastised his fellow committee members, particularly the Republicans, for “capitulating to the governor.”
Sanborn wanted to increase the one-time deduction from the current $25,000 limit a year to $500,000, the federal limit that was increased in last fall’s federal budget agreement.
He noted all the other New England states and 32 other states across the country have adopted the $500,000 limit. “We will be the number one exporter . . . of jobs, the number one exporter of business growth, the number one exporter of economic opportunity,” Sanborn said. “We will be encouraging less economic growth in our state.”
He said the higher deduction rewards companies that invest in New Hampshire by buying goods here.
“We are the worst state in New England, if not America, to support economic growth,” Sanborn said. “We are almost the worst place in America to do business.”
But Bradley said the two bills should be seen as a package to complement the work already done to improve the business tax environment here, and he listed the tax cuts, deductions and credits the Legislature has passed in the last few years.
“(The deduction) is not as high as I would like, but it is what is possible,” Bradley said. “We should not let the perfect be the enemy of the good.”
The governor indicated she would sign the two bills the negotiators agreed to Wednesday.
Sen. Lou D’Allesandro, D-Manchester, said lawmakers had made 33 changes to business taxes in the last 10 years to improve the state’s business climate.
“This is a great place to do business,” he said. “There are some dynamic businesses here.”
Sanborn called the changes minute and said business owners do not want political rhetoric, they want to see numbers.
But Bradley indicated Sanborn could decide to sign off on the agreement or he would be replaced on the committee.
The committee on Senate Bill 342 made quick work of an agreement that allows a company to decide when to pay the tax generated by the infusion of money, which increases the value of the company subjecting it to the 7.5 percent business profits tax.
The House’s version of the bill would give companies an option of incorporating the increase in value at the beginning or over time.
Bradley said removing the step-up tax shows prospective businesses that New Hampshire is supportive of innovative companies and their need to expand over time.
The two bills were also supported by Americans For Prosperity NH, which has pushed business tax changes for years.
“Ending the tax on business investment will give a major boost to our startup companies and give them a level playing field with Massachusetts to compete for innovative companies to grow here,” said Greg Moore, state director for Americans for Prosperity. “Increasing the depreciation deduction will help New Hampshire employers make capital investments that will let them grow and becoming more productive.”
The House and Senate will vote on the compromise agreements Wednesday.
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