September 11, 2009

New Hampshire Holds Hearings on Establishing Income and Sales Taxes

by Joseph Henchman

And while New Hampshire is holding off on a liquor tax, one state legislator is pushing for a state income tax:

The bill would put a flat 5 percent income tax in place, repeal the business enterprise tax, put the statewide property tax rate at $5.50 per $1,000 of value and give each homeowner a $200,000 homestead exemption. Renters would also qualify for exemptions.

Rep. Susan Almy (D) is pushing for the tax, but invited a sales tax proponent to make his case as well (New Hampshire has neither tax):

[Professor Ross Gittell said that if a sales tax were] set at half the rate of neighboring states, it would raise substantial money, continue to draw out-of-state shoppers and allow the state to cut other taxes, he argued.

The comments under the Manchester Union-Leader article sound very skeptical of either proposal:

• "A sales tax is nothing more than an excuse by democrats who can't balance a budget."
• "Please, once you start it you can never go back. Every time the state needs money it will just raise the tax. Does NH want to be like MA?"
• "This isn't about overcoming a temporary shortage of funds at the state level, or even really about the state house's inability to control their spending habits. This is about changing the balance of power, putting more power at the state level, and decreasing local power. Once a broad-based tax is instituted, local control will be essentially gone. It won't happen overnight, but it will happen."
• "A sales tax at a low rate is the same as being just a little bit pregnant."

New Hampshire is quite the draw for business precisely because it has neither tax. Even a low-rate tax can't compete with that messaging.

More on New Hampshire here.