Guest Post by State Sen. Jeb Bradley
Last week’s TAX SUMMIT organized by Representative Susan Almy reaffirmed that New Hampshire’s lack of a general income or sales tax has enhanced our competitive position compared to other states. But the SUMMIT also warned that business taxes are too high and may be hurting our ability to attract high tech jobs to the state.
Unfortunately the TAX SUMMIT focused exclusively on taxes with nary a question raised by the organizers about the other half of the equation — state spending. This isn’t surprising however, given that spending has increased from $9.36 billion to $11.49 over two budgets — a startling increase of 23%! And this is happening at a time when state spending around the nation has decreased over the last two years.
Nevertheless the SUMMIT was instructive. To her credit, Almy, an income tax supporter, insured that witnesses represented a wide variety of viewpoints including opposition to an income or sales tax.
Naturally several speakers supported adopting a sales or income tax. Jeff McLynch of the Institute for Taxation and Economic Policy argued for an income tax based primarily on the need for additional revenue and equity. Laurel Redden of the Granite State Fair Tax Coalition argued for unspecified new taxes to mitigate rising property taxes. No one likes the property tax and most people believe the fairest tax of all is the tax someone else pays! If our tax system is so unfair – why does NH continually rank at or near the top of nationwide surveys that rank states’ livability conditions?
Two of the most compelling witnesses drew clear distinctions between New Hampshire’s tax policy and those of other states. Scott Hodge, President of the Tax Foundation, a non-partisan think tank in Washington, stated that most states garner the majority of their revenue through general income taxes, sales taxes and business income taxes which he termed a “three legged stool.” Without either tax, New Hampshire relies heavily on an 8.5% business profits taxes and a .75% payroll tax paid by employers. Hodge warned that enacting an income tax would be a “huge mistake.” He made the emphatic point that “states that are in the biggest financial trouble are the three legged stool states such as New York, California, Pennsylvania, Illinois, and Connecticut.”
