In his March 29 letter to the editor (“It’s time to tackle problem of sustainable taxation,” Page A8), Tony Payne states that there are 11,000 “family businesses – employers who rely on their annual income to invest back into their businesses, hire new people, make charitable contributions and save for (a) rainy day.”

Perhaps there are 11,000 family businesses that need new accountants. Investments back into the businesses and new hires would be best made with revenue (the cash coming into the businesses), not owner income (the cash taken out of a business after all expenses are accounted for). Charitable contributions can be made from either business revenue or owner incomes; both choices are tax deductible. Savings for a rainy day can be generated by managing IRA contributions from revenue and set asides from income.

The fear of business owners leaving the state in droves due to the 3 percent tax surcharge on net income over $200,000 is overstated. An additional $100,000 of net income will be taxed $3,000.

“That’s it, Martha, we’re moving. It’s going to cost $57.69 a week more to stay in Maine now that we are making $300,000 in net taxable income from our successful family business. We can sell the house, take the kids out of school, find new friends, join new clubs and churches, distance ourselves from our relatives, develop new customers and start our business over somewhere else and avoid that 3 percent surcharge. Real estate commissions and moving costs will only be $40,000 to $50,000. How does that sound?”

I can’t speak for Martha, but it doesn’t sound all that good to me.

Tom Foley

Cumberland Foreside

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