By SHIRA SCHOENBERG
Concord Monitor
February 21, 2010
When Andy Sanborn started his first company, he recalls sleeping on the floor on an air mattress eating ramen noodles. Now, Sanborn owns The Draft in Concord, along with a couple of real estate companies. He won’t say how much money he makes, but he is outraged at the thought of the government telling him what salary is considered “reasonable.”
“Should government have the right and authority to tell people how much money they can make?” Sanborn said. “It’s insulting. If my wife works at Concord Hospital and makes $300,000 a year, no one blinks. If I make $300,000, I have to justify it to New Hampshire.”
For decades, business owners have been required to calculate “reasonable compensation” for federal and state tax purposes. But as state legislators work to clarify those laws, the discussion about what is reasonable compensation has come to the forefront. To the chagrin of those involved in the technicalities of tax law, the discussion is intimately tied to the controversial expansion of the state’s interest and dividends tax to limited liability companies. Tax practitioners and politicians must walk a fine line between reforming the standards for calculating the tax deduction while not trampling on free market values.
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