SECTION FIVE: REPRESENTATIVE BUSINESS TAXPAYERS

The term "representative business taxpayer" has proven to be a difficult concept to define. We had a great deal of information regarding the types of businesses that operate in, and are important to, the Vermont economy. [ See Volume II, Appendix page 37 .] However, information on the size of these businesses has been much more difficult to obtain. Therefore, rather than attempt to say that these cas es represent an "average" or "typical" business in each category, we present the 10 cases included in this report as representative of some of the businesses in Vermont. Detailed financial information for each corporate case is included in the Appendix to Volume II.

In selecting business case studies, we attempted to represent the sectors of Vermont’s economy which include the most number of businesses and the most number of jobs. We used the Annual Report of the Department of Employment and Training as a reference.

We recognize that businesses are subject to many different taxes and fees. However, because of the limited scope of this study, we have assessed only the corporate income tax. The additional liability resulting from filing fees, license fees, sales taxes, etc., is a subject for future study.

Key Findings:

• Vermont’s tax rate (5.5% - 6.6% - 7.7% - 8.25%) ranks 9th or 10th among the 12 comparison states. Maine is the lowest at 3.5%. Florida is second lowest with a flat 5.5%. Vermont’s average rate is third lowest in all but the highest income categories because Oregon has a flat 6.6% rate.

• Vermont has the lowest minimum tax ($150) of the five states that use a minimum tax. Connecticut is 2nd with $250; Massachusetts is 3rd with $456; New York is 5th with a formula that charges 3.5% of net income plus depreciation; and Minnesota is highest with a formula that assesses a minimum tax from $0 to $5,000 based on total property, payroll, and sales.

• Vermont is not among the four states that charge a fee based on corporate capital. These fees are charged on the total value of capital stock (common and preferred) plus paid-in surplus plus retained earnings.

• Washington claims to have no corporate income tax. However, it does impose a Business and Occupation (B&O) tax, which is based on GROSS income rather than TAXABLE income (gross income minus expenses). Except for farming, which is exempt, Washington’s B&O tax places them #1 (highest) in taxes on businesses.

• New Hampshire exempts the first $50,000 of net profit from tax. The rate for profits above the $50,000 limit is 7.5%.

Income Tax on Corporations

Industry	Agriculture		Construction		Transportation		Manufacturing
	Tax ($)	Rank	Tax ($)	Rank	Tax ($)	Rank	Tax ($)	Rank
State
Connecticut	250	4	953	2	4,738	1	1,083	4
Florida	10	10	466	10	2,316	11	530	10
Maine	6	11	297	12	2,232	12	337	12
Massachusetts	456	2	871	5	4,292	4	915	6
Minnesota	118	6	930	3	4,427	3	944	5
New Hampshire	14	8	635	8	3,158	8	722	8
New York	286	3	678	6	3,369	6	1,151	3
North Carolina	674	1	903	4	4,199	5	1,198	2
Oregon	12	9	559	9	2,779	10	636	9
Vermont	150	5	466	11	2,858	9	530	11
Washington	0	12	1,555	1	4,540	2	2,348	1
Wisconsin	14	7	669	7	3,327	7	761	7

Income Tax on Corporations

Industry	Wholesale		Retail - General		Retail - Eating & Drinking
	Tax ($)	Rank	Tax ($)	Rank	Tax ($)	Rank
State
Connecticut	7,087	2	863	3	713	6
Florida	3,465	12	422	10	690	7
Maine	3,888	11	268	12	222	12
Massachusetts	6,708	3	1,051	2	990	2
Minnesota	6,474	4	852	4	721	5
New Hampshire	4,725	8	575	8	475	9
New York	5,040	6	614	6	765	3
North Carolina	5,859	5	786	5	737	4
Oregon	4,158	10	506	9	418	10
Vermont	4,466	9	422	11	349	11
Washington	15,246	1	2,345	1	2,792	1
Wisconsin	4,977	7	606	7	501	8

Income Tax on Corporations

Industry	Services-Hotel & Lodges		Services - Business & Personal		Services - Amusement & Recreation
	Tax ($)	Rank	Tax ($)	Rank	Tax ($)	Rank
State
Connecticut	306	4	1,892	3	1,333	4
Florida	0	8	925	11	652	11
Maine	0	9	589	12	415	12
Massachusetts	456	3	2,004	2	1,126	6
Minnesota	300	5	1,748	4	1,262	5
New Hampshire	0	10	1,261	8	889	8
New York	176	6	1,345	6	1,375	3
North Carolina	1,448	2	1,552	5	1,486	2
Oregon	0	11	1,110	9	782	9
Vermont	150	7	1,000	10	672	10
Washington	3,290	1	8,208	1	2,180	1
Wisconsin	0	12	1,329	7	936	7