Mixed feelings on tax hike among business owners

NORTHAMPTON, Mass. (WWLP) - It's a move that will generate an estimated $2 billion in new revenue for the state.  But not everyone is behind the idea.

During last night’s State of the Commonwealth address, Governor Deval Patrick asked residents of the Commonwealth to support growth by investing in the state's future. But his plans are not going over well with some members of the small business community.

“I would propose that we cut the sales tax from the current rate of 6.25% to 4.5%,” said Patrick inside House chambers.

The plan will also raise income tax by one percent, to 6.25%. It will limit the number of itemized deductions and double exemptions.  Republican House leaders are against the idea, saying “it will be the largest tax increase in the history of the Commonwealth.”

And so is the National Federation of Independent Businesses (NFIB); who’s calling the hike ambitious saying it will make small business owners think twice before hiring or expanding.  The NFIB represents 8,000 small business owners in Massachusetts.

“It's really a small percentage dollar wise, there's no way that that dollar amount would prevent us from hiring a new person or putting on an addition.  Or, hiring more associated people for our business,” said small business owner, Mark Weinburg. 

Weinburg is the President of Northampton's Yes Computers. He employs 12 people and is in favor of the plan, saying it will improve quality of life and make businesses more competitive. Northampton accountant Dan Polachek says the increase would hurt workers the most.

“You're raising it on the worker, on the employee. Everybody in the state is going to pay one percent more, that pays income tax. But at the same time I'm lowering my sales tax or purchases. He's trying to be competitive, is it good or is it bad? I don't know I'd have to see the dollar volume,” said Polachek on Thursday.

It's a dollar amount Crystal Sabot says she's already paying for. This year's fiscal cliff deal raised her Social Security tax four dollars, from $18 to $24.

“It adds up to anywhere from $40 to $60 dollars a month; which is taking out of what I'd be using to pay rent and bills and food,” said the Northampton resident on Main Street.

The state legislature approved a sales tax increase in 2009. Then, taxes went up from 5% to 6.25%.