State Taxation Issues
State Taxation Issues:
Background: As a result of the current economic climate, federal, state and local governments are reviewing taxation policy and seeking way to increase revenues. At the state level, proposals have focused on instituting a sales tax for professional consulting services, including interior design services. ASID believes taxing interior design services would significantly hurt the design industry as the increased costs could prohibit consumers from fully utilizing the services of professional designers. Further, taxing design services damages small businesses and would have a negative impact on the state’s tax revenue, job creation and overall economic growth.
Talking Points:
- State firms confined by the tax lose a competitive advantage to out-of-state firms that are not subject to the tax or multi-state firms that can farm projects to an out-of-state office.
- Taxing design services would significantly harm the design industry by slashing profit margins and decreasing the overall amount and quality of design projects.
- Taxes on services are usually difficult and expensive to administer, both for the business affected and for the government itself.
- Taxes on services place a disproportionate burden on smaller firms, which comprise the majority of the interior design profession.
- The predicted increased state revenue raised by the tax would be offset by the cost of enforcement.
Action: ASID urges its members and coalition partners to oppose any legislative proposals that would institute a sales or service tax on professional services. Taxing professional services would have an adverse impact on the state’s revenue, economy and public welfare and health. Taxing design services would erode the tax base not only by driving out service based firms, but also by keeping businesses from relocating to a particular state and expanding within a state.
More information:
ASID Legislative PolicyBackground on LegislationState Taxation IssuesFederal Taxation IssuesMyth vs FactLegislative Terms
