Most Are Good, Some Are Not

As the U.S. Chamber continues its efforts to alleviate the federal tax burden on small businesses, more than a dozen states are undertaking similar efforts.

With state coffers overflowing-46 states have reported revenues exceeding projections-there has been an influx of tax bills aimed at benefiting small business. At least nine states are considering bills to reduce or repeal the corporate income tax. Others are debating bills to reduce or repeal taxes on purchases of business equipment or machinery. Below are some of the more prominent business-friendly tax proposals.

Kansas-Gov. Kathleen Sebelius (D) proposes reducing the top corporate income tax bracket from 7.35% to 6.95% in tax year 2008 and to 6.75% in tax year 2009 as well as increasing the exemption from the franchise tax. GOP lawmakers favor complete repeal of the franchise tax, and such a proposal has cleared a House panel.

New Jersey-Gov. Jon Corzine (D) plans to let a tax on 107,000 New Jersey corporations expire this year. New Jersey's tax on S corporations-a business organization often favored by small business owners-is set to expire on June 30. Treasury Department spokesman Tom Vincz says the administration has no plans to try to extend it.

Florida-Gov. Charlie Crist (R) wants to cap the property tax on businesses so that they pay either 3% of the value of their property or the rate of inflation, whichever is lower. In addition, Crist would exempt small business owners from the tangible personal property tax on items such as office furniture, equipment, machinery, and computers.

It's not all good news for business, however. California, Illinois, and Pennsylvania are among the states looking to businesses to help pay for proposed universal health care plans or to bolster state pensions. Here is a look at some other tax increase proposals.

Michigan-Gov. Jennifer Granholm (D) has proposed a 2% excise tax on certain services, excluding government, health care, and education. Also, the governor has proposed replacing the Single Business Tax, which expires at the end of this year, with the Michigan Business Tax, a move that would eliminate taxes on payrolls, benefits, and health care and impose them instead on assets, gross receipts, and profits.

New York-Gov. Eliot Spitzer (D) wants to increase state revenues by eliminating so-called loopholes. Critics of Spitzer's plan call it a $616 million business tax increase. It would require companies with out-of-state subsidiaries to file combined, rather than separate, tax returns. The governor also wants to end the tax exemption for cooperative insurance companies, raise the fees on limited liability corporations, and mandate the reporting of tax shelters.