Business Taxes, Licenses & Fees (TLFs) in the City of Johns Creek Part 2 For the purpose of creating equitable compliance and taxation requirements

Transcription

1 Business Taxes, Licenses & Fees (s) in the City of Johns Creek Part 2 For the purpose of creating equitable compliance and taxation requirements for all businesses. 1

2 WHAT ARE BUSINESS TAXES, LICENSES & FEES (s) Current state of taxation purposes in Johns Creek. Business licenses money paid to be granted the permission to conduct business in the governing jurisdiction (i.e. business license) Business fees Reimburse for fee for service (i.e. false alarm charge) Business taxes money paid to government to: Support police/fire protection, local infrastructure and administration general fund (i.e. property taxes, sales taxes) Generate revenue for the governing jurisdiction (i.e. occupational taxes) 2

3 TAXES, LICENSES & FEES All taxes paid by citizens no matter the purpose, name or source. Tax, License, Fee () by Category Budget *P/C/M Local Option Sales Tax $ 20,250,000 C Real and Personal Property Tax 17,800,000 C Insurance Premium Tax 4,300,000 P Motor Vehicle Title Ad Valorem Tax 1,200,000 C Motor Vehicle Tax (tangible pers prop) 400,000 C Recreation Rental Fees 65,000 C Paying for Infrastructure 44,015,000 Building Permits and Inspection Fees 1,650,000 P Municipal Court 1,250,000 C Intergovernmental Revenue 525,000 P Alcoholic Beverage Licenses 407,500 P Recording Intangible Tax 300,000 C Planning, Zoning & Development Fees 200,000 P Transfer from other funds 167,646 M Other Charges for Services 120,000 M Real Estate Transfer Tax 95,000 C Recreation Program Fees 70,000 C Direct Fee for Service 4,785,146 Franchise Fees 4,100,000 P Business & Occupation Tax 1,950,000 P Alcoholic Beverage Tax 830,000 C Financial Institutions 157,000 P Interest Earnings 120,000 M Revenue Generation 7,157,000 $13,289,500 Total Taxes, Licenses, & Fees $407,646 $42,260,000 C - Paid by consumer (i.e. sales tax) P - Pass through to consumer (i.e. premium tax) M - Miscellaneous - Businesses do not pay taxes, licenses & fees all are paid by the citizens as a consumer via direct taxation like sales tax or built into the price of the product like premium taxes. $ 55,957,146 * P = Thru price of product (i.e. premium tax) C = Consumer paid directly (i.e. sales tax) M = Miscellaneous 3

4 BUSINESS MIX IN JOHNS CREEK Current state comparative of per employee cost to pay Avg # FTEs per UBL * Total % of UBL Hours Worked Per FTE to Pay % of TL Cost Per FTE at Min Wage to Pay # of UBL Home based For-profit 1, /UBL $ 286,130 Non-profit 3.7/UBL - 1, ,130 44% 13% $ Brick & Mortar For-profit 1, /UBL 1,840,239 Non-profit 24 39/UBL - 1,606 1,840,239 56% 87% Total 2,851 $ 2,126, % 100% $ *-Total employees, hours worked and cost per employee are reported in Appendix, Reference A & B - Home Based businesses pay approximately 50% more than Brick & Mortar per employee in FTE - Full Time Equivalent (employees) - Taxes, Licenses, & Fees UBL - Unique Business License (businesses) Data pulled from information provided by Mr. Justin Kirouac, Assistant City Manager, for City of Johns Creek. 4

5 HOME BASED BUSINESS Home Based businesses are taxed twice for same services. Home based Table I Avg # Property Tax Hours Worked Cost Per FTE at Min FTEs per Total Paid/UBL to Per FTE to Pay Wage to Pay # of UBL UBL * Johns Creek For-profit 1, /UBL $ 286,130 $ 818,478 Non-profit 3.7/UBL - 1,977 1,245 $ 286,130 $ 820, $ Table II Household Earnings/Taxes % of Avg Household Income Avg Household Income $ 108, % Federal Income Tax Paid (17,437) FICA/MC (7.65%) (8,271) 32% State Income Tax Paid (6,109) Fulton Cty Prop Tax (3,000) Adjusted Income Employee 73,297 68% FICA/MC (5.55%) (1) (6,000) Federal Unemployment (2) (42) 38% State Unemployment (3) (532) $ 66,723 62% For Sole Proprietorship & Partnerships (SP/P) - Form 1040, Schedule C, Ordinary Income Tax at Personal Rate (1) - Pay 13.2% FICA/MC for Sole Proprietorship & Partnerships (2) - Per IRS, remit.6% on first $7K per employee (3) - Per Georgia DOL, remit 5.5% on first $9.5K per employee - Home Based businesses carry a far greater share of the Business Occupational Tax than Brick & Mortar - Home Based businesses carry a greater real estate property tax burden than the Brick & Mortar with > 500 FTEs (employees) - Based on these tax statistics and a lack of significant burden on Johns Creek traffic, recommend ZERO Business Occupational Tax 5

6 BRICK & MORTAR BUSINESS The greater the employee count, the lower the cost per employee to the business for. Table III # of UBL Avg # FTEs per UBL Total Hours Worked Per FTE to Pay Cost Per FTE at Min Wage to Pay > 10 FTEs /UBL $ 1,020, $ =< 10 FTEs 1, /UBL 819, Total 1, /UBL $ 1,840, $ > 50 FTEs /UBL $ 581, $ =< 50 FTEs 1, /UBL 1,258, Total 1, /UBL $ 1,840, $ > 100 FTEs /UBL $ 421, $ =< 100 FTEs 1, /UBL 1,418, Total 1, /UBL $ 1,840, $ > 500 FTEs /UBL $ 160, $ =< 500 FTEs 1, /UBL 1,679, Total 1, /UBL $ 1,840, $ *-Total employees, hours worked and cost per employee are reported in Appendix, Reference E, F, G & H FTE - Full Time Equivalent (employees) - Taxes, Licenses, & Fees UBL - Unique Business License (businesses) 6

7 BRICK & MORTAR BUSINESS > 500 EMPLOYEES Table IV # of UBL Avg # FTEs per UBL Total Hours Worked Per FTE to Pay Cost Per FTE at Min Wage to Pay Johns Creek Property Taxes Company A 4 277/UBL $ 33, $ $ 54,502 Company B 2 600/UBL ,673 Company C 1 800/UBL Company D 1 765/UBL 2, ,997 Company E 4 140/UBL 124, ,920 Total Brick & Mortar > 500 EE's /UBL $ 160, $ $ 250,092 Total Brick & Mortar > 100 EE's /UBL $ 421, $ Total Brick & Mortar > 50 EE's /UBL $ 581, $ Total Brick & Mortar > 10 EE's /UBL $ 1,020, $ Home Based Total 1, /UBL 286, $ $ 820,455 *-Refer to References A-J for detail calculations of this table - The numbers clearly demonstrate the burden the Home Based Businesses pay versus the Brick & Mortar Businesses with greater than 500 FTEs - As the greater than number of employees increases, the cost per employee decreases; equitable tax structure would represent the cost per employee consistent across the all companies FTE - Full Time Equivalent (employees) - Taxes, Licenses, & Fees UBL - Unique Business License (businesses) 7

8 RECOMMENDATIONS CURRENT RECOMMENDATION # of FTEs Avg # FTEs per UBL Total Hours Worked Per FTE to Pay Cost Per FTE at Min Wage to Pay Avg Tax Paid per UBL Total Equates to Hours Worked Per FTE to Pay Cost Per FTE at Min Wage to Pay Avg Tax Paid per UBL # of UBL Home based For-profit 1,655 1, $ 286,130 - $ - $ - $ - - $ - $ - Non-profit ,657 1, , Brick & Mortar Medical Companies 1, , , =< 10 FTEs 2,633 1, , , > 10 & =< 50 3, , , , > 50 & =< 100 1, , , , , > 100 & =< 500 2, , , , , > = 500 3, , , , , ,877 1, ,715, , , Total 17,418 2, $ 2,126, $ $ $ 737, $ *-Refer to References L-O for detail calculations of this table - Based on the inequitable tax paid by all levels, best solution is to charge a flat fee. - Insurance Services businesses are charge $150 flat fee due to the impact of Premium Taxes paid on all premiums charged. - Be the exception and demonstrate Johns Creek is open for business by creating a tax structure that supports growth and prosperity. This same endeavor demonstrates to the residents their ability to generate tax dollars is more desired than repetitive taxation. FTE - Full Time Equivalent - Taxes, Licenses, & Fees UBL - Unique Business License 8

9 APPENDIX 9

10 APPENDIX REFERENCES A B Total Minimum Wage/Hour Georgia Total Hours Worked to Pay # of FTEs Hours Worked Per FTE to Pay Cost Per FTE at Min Wage to Pay A A B C = A/B D E = C/D F = E*B Home based For-profit $ 286,130 1,655 Non-profit ,130 $ ,466 1, $ Brick & Mortar For-profit 1,840,239 14,827 Non-profit ,840,239 $ ,826 15, Total $ 2,126,369 $ ,292 17, $ B Avg # FTE per # of FTEs # of UBL UBL A B C = A/B Home based For-profit 1,655 1, Non-profit ,657 1, Brick & Mortar For-profit 14,827 1, Non-profit ,761 1, Total 17,418 2, FTE - Full Time Equivalent - Taxes, Licenses, & Fees UBL - Unique Business License 10

11 APPENDIX REFERENCES C D C Property Tax Calculation for Home Based Business Property Tax Paid Per Household to Johns Creek Property Tax Paid/UBL to Johns Creek Property Tax Paid Per Household in Total Property Tax Paid/UBL to Total # of UBL Home based For-profit 1,242 $ 818,478 $ 3,726,000 Non-profit 3 1,977 9,000 1,245 $ 659 $ 820,455 $ 3,000 $ 3,735, Per DataUSA.com, average property tax paid in Johns Creek is $3K per household. Per SmartAsset.com, Fulton County Property Tax is $2,341 per household; net is Johns Creek tax ($659). 2 - Assume Unique Business License (UBL) for home based business equals corresponding individual household. D Average Household and Individual Income in Johns Creek Income Avg Household Income $ 108,114 34,393 Number of Households (Per SmartAsset.com) Per Capita Income $ 44,619 83,335 Number of residents (Per Sep 30, 2016 JC CAFR) FTE - Full Time Equivalent - Taxes, Licenses, & Fees UBL - Unique Business License 11

12 APPENDIX REFERENCES E - F Total Minimum Wage/Hour Georgia Total Hours Worked to Pay # of FTEs Hours Worked Per FTE to Pay Cost Per FTE at Min Wage to Pay E A B C = A/B D E = C/D F = E*B =< 10 FTEs $ 1,020,676 $ ,783 12, $ =< 10 FTEs 819, ,043 3, Total $ 1,840,239 $ ,826 15, $ # of FTEs # of UBL Avg # FTEs per UBL A B C = A/B =< 10 FTEs 12, =< 10 FTEs 3,156 1, Total 15,761 1, Total Minimum Wage/Hour Georgia Total Hours Worked to Pay # of FTEs Hours Worked Per FTE to Pay Cost Per FTE at Min Wage to Pay F A B C = A/B D E = C/D F = E*B > 50 FTEs $ 581,510 $ ,208 8, $ =< 50 FTEs 1,258, ,618 7, Total $ 1,840,239 $ ,826 15, $ # of FTEs # of UBL Avg # FTEs per UBL A B C = A/B > 50 FTEs 8, =< 50 FTEs 7,315 1, Total 15,761 1, FTE - Full Time Equivalent - Taxes, Licenses, & Fees UBL - Unique Business License 12

13 APPENDIX REFERENCES G - H Total Minimum Wage/Hour Georgia Total Hours Worked to Pay # of FTEs Hours Worked Per FTE to Pay Cost Per FTE at Min Wage to Pay G A B C = A/B D E = C/D F = E*B > 100 FTEs $ 421,352 $ ,117 7, $ =< 100 FTEs 1,418, ,709 8, Total $ 1,840,239 $ ,826 15, $ # of FTEs # of UBL Avg # FTEs per UBL A B C = A/B > 100 FTEs 7, =< 100 FTEs 8,559 1, Total 15,761 1, Total Minimum Wage/Hour Georgia Total Hours Worked to Pay # of FTEs Hours Worked Per FTE to Pay Cost Per FTE at Min Wage to Pay H A B C = A/B D E = C/D F = E*B > 500 FTEs $ 160,447 $ ,131 4, $ =< 500 FTEs 1,679, ,695 11, Total $ 1,840,239 $ ,826 15, $ # of FTEs # of UBL Avg # FTEs per UBL A B C = A/B > 500 FTEs 4, =< 500 FTEs 11,327 1, Total 15,761 1, FTE - Full Time Equivalent - Taxes, Licenses, & Fees UBL - Unique Business License 13

14 APPENDIX REFERENCE I I Total Minimum Wage/Hour Georgia Total Hours Worked to Pay # of FTEs Hours Worked Per FTE to Pay Cost Per FTE at Min Wage to Pay A B C = A/B D E = C/D F = E*B Company A $ 33,236 $ ,584 1, $ Company B , Company C Company D 2, Company E 124, , Total $ 160,447 $ ,131 4, $ # of FTEs # of UBL Avg # FTEs per UBL A B C = A/B Company A 1, Company B 1, Company C Company D Company E Total 4, FTE - Full Time Equivalent (employees) - Taxes, Licenses, & Fees UBL - Unique Business License (businesses) 14

15 APPENDIX REFERENCES J-K J Company E - Property Tax Allocation (Johns Creek) Total Property Square Footage Johns Creek 2016 Total Tax Tax Per Square Foot Estimate Location Square Footage Estimated Property Tax for Johns Creek per location A B C = B/A D E = C*D Location 1 122,193 $ 34,713 $ ,000 $ 21,560 Location 2 128,651 35, ,000 21,560 Location 3 99,779 24, ,000 18,480 Location 4 90,582 11, ,000 10,010 Total 441,205 $ 106,544 $ ,000 $ 73,920 K Company E - Property Tax Allocation (Fulton County & Johns Creek) Total Property Square Footage Fulton County/Johns Creek 2016 Total Tax Tax Per Square Foot Estimate Location Square Footage Estimated Property Tax for Fulton County/Johns Creek per location A B C = B/A D E = C*D Location 1 122,193 $ 267,061 $ ,000 $ 168,630 Location 2 128, , , ,240 Location 3 99, , , ,760 Location 4 90,582 91, ,000 77,770 Total 441,205 $ 819,653 $ ,000 $ 572,880 Location 1 - State Bridge Road Location 2 - Haynes Bridge Road Location 3 - Holcomb Bridge Road Location 4 - Douglas Road *Company's 1-5 property tax information pulled from the Fulton County Tax Assessor's wesbite for

16 APPENDIX REFERENCE L L Excluding Medical Companies Minimum Total Hours Hours Worked Cost Per FTE Avg Tax Remove Medical Total Wage/Hour Worked to Pay Per FTE to Pay at Min Wage to Paid per Total Companies * (Excluding Medical) Georgia # of FTEs Pay UBL A B C D E = C/D F G = E/F H = G*D I = C/M =< 10 FTEs $ 819,563 $ 94,366 $ 725,197 $ ,027 2, $ $ > 10 & =< ,166 30, , ,375 3, , > 50 & =< , , ,091 1, , > 100 & =< , , ,932 2, , > = , , ,131 3, , Total $ 1,840,239 $ 125,211 $ 1,715,028 $ ,556 13, , # of FTEs # of UBL Avg # FTEs per UBL J M N = H/I =< 10 FTEs 2,633 1, > 10 & =< 50 3, > 50 & =< 100 1, > 100 & =< 500 2, > = 500 3, Total 13,877 1, A B NOTE * # of FTEs Remove Medical Companies Total # of FTE (Excluding Medical) =< 10 FTEs 3, ,633 > 10 & =< 50 4, ,675 > 50 & =< 100 1,244-1,244 > 100 & =< 500 2, ,691 > = 500 4, ,634 Total 15,761 1,884 13,877 A # of UBL Remove Medical Companies Total # of UBL (Excluding Medical) =< 10 FTEs 1, ,213 > 10 & =< > 50 & =< > 100 & =< > = Total 1, ,428 B FTE - Full Time Equivalent - Taxes, Licenses, & Fees UBL - Unique Business License * Medical Companies pay $400 flat fee per Licensed Physician, so remove from the recommendation calculation. 16

17 APPENDIX REFERENCE M M MEDICAL COMPANIES Minimum Total Hours Hours Worked Cost Per FTE at Total Wage/Hour Worked to Pay Per FTE to Pay Min Wage to Avg Tax Paid Georgia # of FTEs Pay per UBL A B C =A/B D E = C/D F = E*B G = A/I Medical Companies $ 125,211 $ ,270 1, $ $ Avg # FTEs # of FTEs # of UBL per UBL H I J = H/I Medical Companies 1, Recommendations A - If pay annual fee for providers and primary purpose is medical/dental/pharmaceutical purposes, should NOT have to pay for retail sales. B - Alpharetta fee is $250 - should reduce to be more competitive. FTE - Full Time Equivalent - Taxes, Licenses, & Fees UBL - Unique Business License 17

18 APPENDIX REFERENCES N-O N RECOMMENDATION Total Minimum Wage/Hour Georgia Total Hours Worked to Pay Excluding Equates Medical to Companies Hours Worked Per Cost Per FTE # of FTE FTE to Pay at Min Wage to Pay Avg Tax Paid per UBL A = C*B B C = E*D D E * F * G = A/I =< 10 FTEs $ 116,254 $ ,035 2, $ $ > 10 & =< , ,381 3, > 50 & =< , ,576 1, , > 100 & =< , ,388 2, , > = , ,131 3, , Total $ 612,704 $ ,511 13, $ $ # of FTEs # of UBL Avg # FTEs per UBL H I J = H/I =< 10 FTEs 2,633 1, > 10 & =< 50 3, > 50 & =< 100 1, > 100 & =< 500 2, > = 500 3, Total 13,877 1, NOTE * E & F = Hours Workd per FTE to Pay and Cost Per FTE at Min Wage to Pay equal to > = 500 FTEs. * Medical Companies pay $400 flat fee per Licenses Physician, so remove from the recommendation calculation. O ORIGINAL CALCULATION Excluding Medical Companies Minimum Total Hours Hours Worked Per Cost Per FTE Total Wage/Hour Georgia Worked to Pay # of FTE FTE to Pay at Min Wage to Pay Avg Tax Paid per UBL A B C = A/B D E = C/D F = E*B G = A/I =< 10 FTEs $ 725,197 $ ,027 2, $ $ > 10 & =< , ,375 3, , > 50 & =< , ,091 1, , > 100 & =< , ,932 2, , > = , ,131 3, , Total $ 1,715,028 $ ,556 13, $ $ 1, # of FTEs # of UBL Avg # FTEs per UBL H I J = H/I =< 10 FTEs 2,633 1, > 10 & =< 50 3, > 50 & =< 100 1, > 100 & =< 500 2, > = 500 3, Total 13,877 1, FTE - Full Time Equivalent - Taxes, Licenses, & Fees UBL - Unique Business License 18 * Medical Companies pay $400 flat fee per Licenses Physician, so remove from the recommendation calculation.

19 HOME BASED BUSINESS Home based Table I Property Tax Hours Cost Per FTE at Avg # Paid/UBL Worked Per Min Wage # of UBL FTEs per UBL * Total to Johns Creek FTE to Pay to Pay For-profit 1, /UBL $ 286,130 $ 818,478 Non-profit 3.7/UBL - 1,977 1,245 $ 286,130 $ 820, $ Table II % of Avg Household Earnings/Taxes Household Income Avg Household Income $ 108, % Federal Income Tax Paid (17,437) FICA/MC (7.65%) (8,271) 32% State Income Tax Paid (6,109) Fulton Cty Prop Tax (3,000) Adjusted Income Employee 73,297 68% NOTE 1 - is additional 35% paid on top of Property Tax NOTE 2 - Brick & Mortar companies that are not-for-profit DO NOT pay property taxes FICA/MC (5.55%) (1) (6,000) Federal Unemployment (2) (42) 38% State Unemployment (3) (532) $ 66,723 62% For Sole Proprietorship & Partnerships (SP/P) - Form 1040, Schedule C, Ordinary Income Tax at Personal Rate (1) - Pay 13.2% FICA/MC for Sole Proprietorship & Partnerships (2) - Per IRS, remit.6% on first $7K per employee (3) - Per Georgia DOL, remit 5.5% on first $9.5K per employee FTE - Full Time Equivalent - Taxes, Licenses, & Fees UBL - Unique Business License 19