As a local resident of New York City, I am quite offended by Mayor Bloomberg’s budget proposal to offer a tax break to self-employed, unincorporated, residents of the city. And while most New York City residents might applaud this effort by Bloomberg, I’m sure once they read this post, they won’t be in favor of it anymore.
It’s bad enough that small business and self-employed issues aren’t raised enough during the debates for Election 2008. And it’s even worse that in local arenas, the issue is often only raised as empty promises to the local masses; especially when local small law proposals are masks for the upper class/elite. Mayor Bloomberg’s latest budget proposal includes such a proposal.
Bloomberg’s executive budget proposal includes a measure that will give a personal income tax-credit to unincorporated businesses that incur an unincorporated tax as residents of New York City. So basically, the tax-credit is an effort to cancel out a partial amount. It’s not a huge break, but it’s something. Speaking as a both a freelance writer and small business owner, this tax doesn’t mean a whole lot for me.
The tax-credit, an 8% increase in credit to one’s personal income, would result in someone who makes $150,000 from business profits, receiving a $450 tax break. However, that’s compared to the $5,600 in unincorporated business taxes that one would pay. So instead of paying the whole $5,600, a freelancer would only pay $5,175.
Now, that doesn’t sound like a big break to me, but for some it may be, and I don’t mean to insult you by anything I say. But this whole tax-break is just a façade that not only mocks small business owners, but hurts the city as a whole by taking away tax money from the city of New York.
So who does the tax-break actually benefit?
It profits the large unincorporated businesses, such as law firm and financial institution partnerships. A company that makes $1 million in profits receives a $3,200 tax break, and the break of course gets higher and higher as the profits go up. This puts a lot of money in the hands of unincorporated big business, and takes a lot of money out of the general public’s finances. With this proposed tax-break, 80 percent of the tax cut will go to those with incomes over $150,000, which means that $23 million in tax cuts will go to relatively few wealthy entities, and only $5 million to the true small business owners and freelancers.
The tax break could easily be fixed by one of two options. It could only be applied to those making less than $150,000 (or some number around that), which would keep money in both the hands of self-employed and the city of New York. The other option is that the unincorporated tax break is converted to a regressive tax-break.
It hurts me that something like this cannot only be proposed, but can go so relatively unnoticed. Afterall, the majority of the people getting screwed by this bill will be the people who elect Bloomberg into office, should he win. So why not make this a bigger deal? Well, because Bloomberg and his staff don’t want it to be, and as we all know, Bloomberg does have connections to the media. But he’s not the first politician to hide the true meaning behind a proposal, especially one related to taxes. And he’s certainly not the first one to get his back scratched by corporate America, or in this case, un-corporate America.