Question 1: Live Free or Tax Harder
By Lee Schalk, National Taxpayers Union State Affairs Manager
Whichever way they identify themselves politically, Granite State citizens who abide by the “Live Free or Die” motto tend to agree that government has a spending problem, not a revenue problem. For New Hampshire, one of the State’s trademark features is its lack of a personal state income tax, and Question 1 is an opportunity to enshrine that freedom in the constitution.
Positioned in the Northeast amongst largely liberal leaning, tax-and-spend states, New Hampshire has remained one of the most attractive states for businesses and individuals, thanks to the absence of punitive state income and sales taxes. In fact, New Hampshire was recently ranked seventh in the Tax Foundation’s 2013 State Business Tax Climate report, while the rest of the Northeast failed to crack the top twenty.
For the sake of economic competition, neighbors Vermont (47th), Maine (30th), and Massachusetts (22nd) would be wise to follow New Hampshire’s lead on the state income tax, and get rid of it. Though, it’s likelier they’ll seek more money from taxpayers than reform their governments, and breathe a sigh of relief if Question 1 fails.
For their part, New Hampshirites seem to be divided into three camps on a constitutional income tax ban: for and against, and those who are on the fence because they’re hesitant to alter the State Constitution in any way.
It’s understandable that some may be thinking, “we aren’t going to implement a state income tax anytime soon, so this amendment is not needed. It would unnecessarily complicate our Constitution, and other states without income taxes don’t clutter their constitutions with policy statements either.”
Actually, elsewhere in the country states that don’t have broad-based income taxes have enacted or are considering safeguards to preserve their fiscal advantages. Back in 1990, Nevadans approved a constitutional amendment to keep their state income-tax-free. Six years later Floridians opted to require a two-thirds vote of citizens for any new constitutionally imposed taxes, including an income tax. South Dakota voters passed a law requiring a two-thirds supermajority in the Legislature to enact new taxes, again including an income tax. Thanks to a Constitutional Amendment, Texans have made adoption of any future income tax contingent on a vote of the people. In Tennessee, lawmakers have initiated an amendment process that could allow citizens a 2014 vote to confirm their constitution’s ban on an income tax. Considering that Tennessee came within five votes of passing such a tax through its lower chamber in 2002 – even amid some of the strongest grassroots protests in recent history – it’s no wonder there’s so much support for a strong constitutional remedy.
As similar proposals have done outside New Hampshire, the underlying purpose of an amendment is to send a message to the elected officials in Concord that taxpayers value the current tax structure, and recognize the economic impact it has on businesses and individuals in the state.
Critics also claim that an amendment would tie legislators’ hands. Still, don’t constitutions exist to restrain government, and require consent of the governed on fundamental questions involving their own future well-being? Few such questions are as fundamental as allowing the state to reach directly into citizens’ paychecks.
In any case, an amendment can be removed, or an income tax implemented through the same process. The current proposal would not make the implementation of the state income tax impossible, but it would make it more difficult.
This is how the State Constitution was designed to work. An amendment has passed through both bodies of legislature with at least 60 percent support and is now in the hands of the people.
Voters of all political persuasions have a vital decision to make, that will affect New Hampshire’s future: whether or not to protect New Hampshire’s tax climate advantages over the entire Northeast and the majority of the country, and protect their wallets from prying politicians They can send the message that New Hampshire will always value freedom and remain a safe haven for those seeking shelter from out-of-control tax rates.