Hassan right to veto budget, we have bigger tax problem
To the Editor:
I would like to respond to Sen. Daniels’ letter of Aug. 6: "Senator disappointed by governor’s budget veto."
Sen. Daniels stated that New Hampshire ranks 48th in the nation in business taxes. This a very selective reading of a recent report, which also states that New Hampshire has the 7th most favorable climate for businesses. In fact, when the total business tax burden is accounted for, New Hampshire falls well below the average when compared with other states.
Some context is required here. Why, when the state’s economy now exceeds even its pre-2009 maximum, has our state government’s tax revenue not followed suit? This is almost entirely because, in the intervening period, the legislature has already reduced taxes, half of that revenue loss being due to reductions in the very business taxes (thresholds, not rates) the senator argues for reducing further.
The proposed reductions will eventually reduce state revenue by another $90m/2yr. Though only 1 percent of the state’s current budget, that is still more than the entire amount the state provides to the community college system. This cut in tax revenue should not be viewed in isolation but seen as a wider and much deeper assault on the State’s revenue over the past several years.
Some may applaud these past tax cuts. However, it results in increases in our property taxes, both residential and commercial; the State cuts payments to towns, but most of the town’s spending cannot be similarly cut for contractual reasons or because services are already at minimal levels.
Furthermore the great majority of tax savings would go to multi-nationals; they will deploy those savings wherever they see the best return. So we definitely lose revenue and hope it might stay in NH? Evidence also shows such tax cuts do little to generate business growth and any resultant tax revenue generated won’t even come close to replacing that lost.
This is all part of the bigger tax problem in NH. Our tax system, reliant so much on local property taxes, is archaic. One result is that NH has the dubious honor of having the highest income inequality of all New England States.
Gov. Hassan took a principled stand in vetoing this budget because of the threat to state revenue, Senator Daniels disappointment notwithstanding.