CtTaxed.com

Forcing Businesses Out Of State

The insidious thing about a delivery tax is that it just keeps giving or taking. Especially if your supplier or customer is based in Connecticut.

The Delivery Tax penalizes Connecticut based companies from doing business with other Connecticut based companies and will force work out of the state.

Consider the following.

If I buy and order a part, under this tax I would pay for delivery and the subsequent tax on that delivery once it enters Connecticut.

Once I process those raw materials and ship them to my customer, my customer would have to cover my previous delivery tax on the raw materials, this puts Connecticut based companies at a disadvantage with the known sane world.

If my customer is Connecticut based THEN another delivery tax is assessed, which my customer has to pay also. Essentially my Connecticut based customer is paying delivery tax twice.

Subsequently if I buy from a Connecticut based supplier I get double whacked. I pay for delivery to my supplier then delivery to me and then delivery to my customer. In this case my Connecticut based customer would get triple whacked. Actually they would not, they would be long gone.

I run a business in Connecticut, I have always tried to do business with other Connecticut based businesses, this tax would penalize my company for doing business with Connecticut companies and force me to push work outside of the state. It would force me not to bring raw materials in to the state and to have those raw materials processed out of state. Hard to run a manufacturing business when you don’t want to bring the material to your facility.

The contract manufacturers I deal with, win and lose contracts sometimes on pennies a unit. These companies are constantly aware that China and India are breathing down their necks.

Typically stateside companies are competitive up to a certain volume level. Above which it makes economic sense to move the manufacturing offshore. That magic number varies with industry. But typically with printed circuit boards and similar items once you reach 5,000 to 10,000 you are starting to look offshore. And there are many brokerage companies that will smooth the process for you.

This tax would essentially lower that volume level, at which you go overseas. Instead of 5,000 units it may be 3,000 units. This lowers the available work and volume of work available to Connecticut businesses.

Practically speaking this tax would be very difficult to calculate and collect. Would the UPS company charge me differently if I am one mile further down the road than his/her previous delivery? Or would there be just one massive general surcharge, the same for all?

In a time with record business closures, this proposal is really stupid. It betrays a fundamental lack of basic understanding of business.  Really calls in to question, no essentially proves the people who suggested this tax are not fit to serve.

No comments yet

Leave a Reply