Income tax helps homeowners
Count us in:
For decades, The Cabinet has been editorializing in favor of replacing the grievously unfair property tax with an income tax, and now, for the first time since 1999, there is a realistic plan to support it.
This plan has been put forth by state Rep. Paul Henle, a Concord Democrat. It is one he insists is revenue neutral and, he also insists, will – or at least should – have the support of New Hampshire’s business community. The plan, in a nutshell, is this, according to a story in the New Hampshire Union Leader:
It would cut the business profits tax in half (from slightly more than 8 percent to 4 percent); repeal the statewide property tax; repeal the utility property tax (passed along in electric rates); and restore the state’s 35 percent contribution to local retirement costs (a liability that threatens to bankrupt municipalities).
All of that lost revenue would be replaced by a 3.95 percent tax on income.
We have said, since at least the mid-90s, that an income tax is the only fair way of collecting revenue from taxpayers because it is based upon one’s ability to pay rather than the estimated value of the property one owns. This is especially important for people on fixed incomes who can’t count on much of an increase in Social Security from year to year and who aren’t all lucky enough to have worked for companies that provided them with a pension or a 401(k).
Some people, even in this relatively well-off state, have trouble paying their property taxes. When the bulk of a state’s revenue is dependent upon such a tax system, it is bound to hurt people who might find themselves out of work.
When your town needs a new school or even something comparatively small such as a new fire engine, the money needed to pay for it comes from your property tax, and the property tax is unforgiving: If you find yourself out of work, you still must pay what your assessment dictates.
But with an income tax … well, the concept is clear: It is based upon your income. If you have a large income, well, 3.95 percent of $1 million (for a lucky few) would be $39,500. For someone earning $100,000, it would be $3,950. It is likely that the person earning that $1 million is paying less than $39,500 a year in property taxes, although there are some homes on the Seacoast that might reach such a point.
But it is highly likely that a person making $100,000 a year is paying much more than $3,950 in property taxes. And certainly there are a lot of New Hampshire residents who are making quite a bit less than $100,000, so do the math: If you and your family make $50,000 a year, then your income tax would be $1,975. That’s probably less than you pay in property taxes now.
The income tax just makes sense, and it has just made sense for a very long time. The argument against it is always pretty much the same: The legislators in Concord will just tack it onto the property tax and just spend more and more because that’s what legislators do.
Maybe in Massachusetts, but don’t we trust our legislators more than that?
And besides, Henle’s bill takes all of that into consideration. Those 400-plus folks in Concord can’t see this as just a revenue windfall and opt to buy $600 wrenches, like the U.S. military is wont to do.
It’s possible Henle’s bill won’t even get a hearing before this Republican-
dominated Legislature, and that’s too bad. We can only wonder what they might fear if no hearing is given.
But we, as the people being taxed, should demand a hearing, and we should speak out. The property tax is not our friend. It’s time we gave it the bum’s rush.