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Progressive Business Owners in Maine Support Obama Tax Proposal
12/20/2012   Reported By: A.J. Higgins

How would the President's proposed tax plan affect small businesses in Maine? Depends on whom you ask. Several members of a progressive small business owners group said they likely wouldn't be affected by higher taxes on those earning above $250,000, as the President proposes as a way to avoid heading over the so-called fiscal cliff. But opponents insist that such an approach would be a job killer for small businesses in Maine and across the country.

Without a bipartisan agreement, broad tax increases on nearly all taxpayers and budget-wide spending could ensue. Opponents claim the higher taxes would be job killers for small business owners, but members of the Maine Small Business Coalition disagree.

As the deadline looms, the debate over a compromise on Bush-era tax cuts that are scheduled to expire by the end of the year is getting louder. It's on the mind of Maine Governor Paul LePage who spoke to members of the Bangor Region Chamber of Commerce earlier this week.

"We have to pay our bills because of the pending fiscal cliff, the pending fiscal cliff in this country, it's going to happen," LePage said.

Republicans like LePage worry about the impact that mounting national and state debt will have on small businesses. Many Republicans oppose a controversial aspect of President Barack Obama's solution, which would impose higher taxes on those earning more than $250,000 a year. Opponents argue that the higher taxes would disproportionately affect small business owners in Maine who would be forced to cut back on employees and benefits to maintain income margins.

"It's a story that sounds terrific until you start looking at the facts and then it completely stops making sense," Costin said.

John Costin owns Veneer Services Unlimited in Kennebunk. He's also a member of the Maine Small Business Coalition, a wing of the progressive Maine People's Alliance, that's challenging the math of the President's opponents. Costin said his business grossed more than $300,000 dollars last year. But with payroll and expenses factored in, he was left with a net profit of about $23,000. He said there are business owners in Maine who make more, but he said few are crossing that $250,000 threshold.

"To reach a bottom line figure of $250,000 dollars a year, you have to be taking in a lot of revenue and most small businesses are nowhere near that number," Costin said. "97% of small business owners earn at the bottom line less than the $250,000 dollar mark that's being discussed."

Costin's views were shared by Sam Kelley, a Scarborough businessman who buys and sells tractor trailers. Kelley said he doesn't believe that businesses live or die on changes in the tax code.

"I've been around business for a long time and not once in those 30 years when I had done my setting up for what I thought I would do the following year, not once have I ever packed it in or even said, Well if the tax rates might go up or down next year, I've got to factor that in to my estimates for the year," Kelley said.

But Hampden businessman and Republican state Sen. Andre Cushing said Kelley's and Costin's arguments fail to acknowledge the large numbers of Mainers who run businesses that are taxed as LLCs or sub-S corporations, which means that they are taxed on the basis of the income of the individuals. Cushing said these business owners frequently run two or three different businesses to keep their employees working for as much of the year as they can. In many instances, Cushing said, deductions can't be applied at a level that reflects the costs of doing business. And he said higher taxes will definitely affect their bottom line.

"And very quickly you can start exceeding that $250,000 income level and you may find that there are some things that people just can't deduct that still wind up being expensive," Cushing said.

Cushing said the taxes on higher incomes would have a disproportionate impact on Maine business people, who are less likely to be able to absorb them.

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