Can New Hampshire continue to rely on tax gimmicks?

Update (9/28/2012): The Union Leader follows up Wednesday’s article with one today about a report showing that the state’s former economic strength in the region is faltering, and that New Hampshire now needs to address several weaknesses, including “high costs of electricity, health care and housing, high corporate tax rates, lack of spending on transportation and technology infrastructure, and the low investment in higher education.”

Continue reading the original post, from 9/26/2012, below.

According to the Union Leader, the much-touted “New Hampshire Advantage” is waning.

The Union Leader quotes Brian Gottlob, president of PolEcon Research in Dover:

“I think there has been a New Hampshire Advantage, but it is understood only halfway. We have this tax structure that does favor well-educated, skilled entrepreneurs. But the other side of that is what people really want in the advantage — they want value. They want quality services at a lower cost than they would pay elsewhere.”

Pandora Mill restoration
Manchester’s Millyard is a growing tech cluster, competing with Mass. – Photo by grenfrog00

At least one political party cites New Hampshire’s lack of a sales or income tax as the state’s engine for economic growth, while ignoring the need and demand–in cities like Manchester and across the state–for better roads, commuter rail, better funding for education and other services, property and business tax relief, and so on. But Mr. Gottlob and other panelists at yesterday’s annual Economic Forecast, hosted by the Greater Manchester Chamber of Commerce, make the point that New Hampshire has focused too much on (some) low taxes at the expense of investment.

And the panelists suggest that the state’s exceptionally strong economy since the 1980s has been more a result of the rapid population growth in the 1980s and 90s than tax policy. Now that the population growth is slowing, so too is the “New Hampshire Advantage.”

Community College System of New Hampshire chancellor Ross Gittell, also a panelist, noted that while the state touts its lack of a sales or income tax as the “New Hampshire Advantage,” New Hampshire actually relies heavily on business, corporate and capital gains taxes, which could actually stifle economic growth and job creation in the state.

Cities & Technology Sector Jobs

A comparison of NH & MA tech sectors – from the Boston Globe

As Mr. Gottlob said, New Hampshire’s “southern neighbors whose policies we often deride” are growing much faster, in terms of both population and job growth, while New Hampshire is now somewhere in the middle nationally.

The article suggests that Massachusetts and Connecticut are different from New Hampshire, because the larger urban centers–with big universities–attract technology and start-up investment. But as the Boston Globe discussed at length last month, Manchester has its own booming technology and start-up cluster growing in the Millyard.

Those sort of businesses demand a strong infrastructure, and the young people those businesses need to attract as employees want to live in cities with the robust urban amenities–vibrant neighborhoods, bustling downtowns, good parks and schools, alternatives to driving everywhere–that New Hampshire is drastically under-funding.

And that’s to say nothing of the need for well-educated workforce and low student debt. New Hampshire ranked dead last in funding for higher education before the current legislature cut that funding in half, and the state’s graduates continue to have the highest student debt burden in the country. Those are pretty lousy superlatives when you’re looking to revive the “New Hampshire Advantage” and spur economic development.

New Hampshire is one of the wealthiest states in the country, with the seventh lowest unemployment rate. It doesn’t rank dead last in investment in its youth–and thereby its economic future–because it doesn’t have the money, but because it has an outdated tax structure. New Hampshire does not have a spending problem; it has a revenue problem.

The New Hampshire Disadvantage

New Hampshire may like to deride Massachusetts, but the fact is that without Boston just to the south, the tax-free malls just north of the border wouldn’t exist, and the liquor stores and convenience stores ringing the borders wouldn’t be able to peddle their cheep booze and cigarettes. There’s no doubt that those things bring money and jobs–albeit not necessarily the best paying–into the state, but they’re not sustainable ways to grow the economy, raise much-needed state revenue, or invest in a more vibrant future for the state. In short, much of the so-called “New Hampshire Advantage” is a gimmick.

Manchester’s tax cap keeps local property taxes down, but budget cuts from Concord have shifted more costs from the state to the city, resulting in cuts to city schools, etc.

But the lack of a sales tax probably makes sense: it is a vital component to the state’s retail and tourism economy, and enough has been built up around it–just look at the entire town of Salem and southern Nashua, let alone the malls there–to make implementing a sales tax unrealistic.

Plus, a sales tax is almost as regressive as New Hampshire’s current tax-of-choice, the property tax, which places a disproportionate burden on seniors, and working and middle class families. And as too many people have found in the past few years, you still have to pay the same property taxes even if your income declines.

More problematic to future growth is the state’s lack of an income tax. New Hampshire actually has an income tax–it’s just that it’s limited to income earned from interest and dividends. The last state to implement a new income tax was Connecticut in 1991, which previously had an income tax on interests and dividends, as New Hampshire has had since 1923. And as Mr. Gottlob pointed out, Connecticut’s population and economy are growing much faster than New Hampshire’s.

But the real problem with the current lack of an income tax is that it’s exactly the opposite of what it’s billed as–it’s really a disadvantage. Even with the draconian cuts made by the current legislature, which will almost certainly lead to long-term economic stagnation, New Hampshire struggles to raise enough money to fund infrastructure investment and maintenance, social services, education and so on. And to do those things, it increasingly relies on extraordinarily high property taxes, as well as some of the highest corporate income taxes in the country.

So while the state may be attracting residents to live in suburbs just across the state line, who often continue to work back in Massachusetts, it is making it prohibitively expensive to run a business in the state. When a start-up can enjoy a similar cost-of-living, with lower property and corporate taxes in Lowell than in Manchester, how is that advantageous to New Hampshire?

The Real New Hampshire Advantage & The Future

An income tax may not be the answer to New Hampshire’s chronic revenue problems–and even if it is, we probably won’t see one any time soon. LivableMHT is no tax expert, and there may be other viable alternatives, such as a Land Value Tax. LVT is a tax exclusively on land, not including improvements (buildings, etc.) to it, which has the added benefit of reducing sprawl, and is used in Pennsylvania. There may be other revenue options, but it’s clear that the current over-reliance on property and corporate taxes, coupled with chronic under-funding across the board, and downshifting of costs to cities and towns is unsustainable. 

And gimmicks–like casino gambling, border-hugging liquor stores and the current legislature’s lowering of cigarette taxes–aren’t going to cut it. New Hampshire’s revenue structure is simply too unsustainable for those to make a long-term difference. And just as important, we have to ask: what kind of place do we want New Hampshire to be? Do we really want it to be a casino-clogged, cheap cigarette store-lined refuge for wealthy tax-dodgers–some freakish cross between Las Vegas and Switzerland? Or a place where the natural beauty is matched by a skilled, well-educated workforce, and strong communities?

The real NH Advantage is its people and communities. But without investing in education and infrastructure, more of those people will be forced to live, work and study elsewhere. Photo by PSNH

New Hampshire’s real advantage has to do with a lot more than an archaic tax structure. Its landscape, location, people, communities and cost-of-living have a lot more to do with why people choose to live and do business in New Hampshire than its lack of income tax does. Except perhaps for a relatively small number of people living along the border in the heavily populated Merrimack Valley, people choose where to live based on a lot more than income tax rates. And even there, many people may find the lower property taxes and greater investment in education in Massachusetts to be more attractive than the lack of an income tax in New Hampshire. After all, property taxes go up a lot more often than income taxes do.

As the Globe article points out, the bigger advantage for tech start-ups in Manchester isn’t the lower income tax burden on employees, but that real estate costs are about 1/5 of those in Cambridge, Mass. Of course, as lovely as Cambridge is, the 1980s high-rises in Kendall Square pale in comparison to the beauty and warmth of the Millyard with the Merrimack roaring by. So the cheaper rent and the rugged beauty of the landscape are probably both more of a motivator than the tax structure.

In fact, the Globe suggests that that tax structure may, in fact, be a disadvantage:

Even though New Hampshire can point to past successes, it has been awhile since the technology spotlight has shined down on the state in a big way.

“There’s a reason why a lot of companies want to be located here,” said Pamela Goldberg, chief executive of the Massachusetts Technology Collaborative, a quasi-public organization that promotes the Commonwealth’s tech economy. “We have so many smart young people graduating from our colleges who can walk into these start-ups and start contributing from day one.”

Manchester isn’t far from MIT, Harvard, UNH and other schools graduating people looking for start-up jobs, but with New Hampshire’s high in-state tuition and debt-laden graduates, is it any surprise that New Hampshire loses more young residents than any other state in the country? 

And that’s to say nothing of the kind of places and amenities that young people look for these days. Oddly enough, they’re not so different from what retirees are looking for–walkable neighborhoods, affordable alternatives to driving (public transit and bike lanes, for instance), good schools, happening downtowns with plenty of dining and nightlife options. Without investing in education and infrastructure, how can we expect young workers, middle-class families or retirees to be able to stay in New Hampshire to drive future economic growth?

When New Hampshire doesn’t raise enough revenue to fix structurally obsolete bridges or properly fund public education, how can we expect it to be able to make the sort of investments needed to encourage economic development? New Hampshire’s current tax structure isn’t an advantage–it has created a structural inability to make necessary investment, and is an increasingly unsustainable revenue source. When our skilled workers need to leave the state to pay off student debt or enjoy an urban lifestyle, when the state’s lower cost-of-living and beautiful landscape aren’t enough to attract or retain residents, when high property taxes force seniors out of their homes and lead to continued sprawl, when the state is growing more slowly than its neighbors with higher personal taxes, and when we can’t make the investments necessary to compete, then we should really call the current tax structure the New Hampshire Disadvantage.


23 thoughts on “Can New Hampshire continue to rely on tax gimmicks?

  1. “New Hampshire is one of the wealthiest states in the country, with the seventh lowest unemployment rate.”

    By no accident. Low taxes are largely to blame.

    Furthermore, this is just a bald-faced lie:

    “New Hampshire’s ‘southern neighbors whose policies we often deride’ are growing much faster, in terms of both population and job growth.”

    I believe it was 2011 that saw Massachusetts as the *only* state in the union to lose population. I can’t find the info in a cursory search, but I noticed this was also the case in 2003-2004:

    The highlights:

    “Massachusetts is the only state estimated to have lost population between 2003 and 2004.”

    “According to the 2000 Census, Massachusetts migrants leaving the state are younger, better educated, more likely to be employed in a knowledge-intensive industry, and less likely to be married, to have children, and to own a home.”

    Note the latter is the demographic this author claims aren’t moving to NH due to lack of amenities.

    In short, this piece is from an author that has a political agenda and cares little for the facts.

    1. Catherine, first of all, despite how commenting may be conducted elsewhere on the web, civility is the rule here. We’d like to encourage vigorous discussion, and expect disagreement with some of our posts, but slandering posters (as well as the people they are quoting) as liars, or making any other personal attack is not acceptable here.

      Second, if you’re going to accuse us of lying, you might want to cite data from more recently than 12 years ago. A lot has changed since the 2000 census–we’ve had two recessions, which have greatly limited mobility nationwide and migration into New Hampshire; the economy has evolved, including the meteoric rise of the tech sector, which Manchester is competing for; we’ve seen the costs of higher education skyrocket, while wages have largely stagnated; and we’ve seen state funding dwindle, while more services are downshifted to cities and towns, and ultimately property and business taxpayers.

      The same is true of the article you linked to, from 2005, which while acknowledging the population loss of the preceding years, suggests making the very same investments that we discussed in this post to stem those losses. Some of those policy changes and investments–such as improving public transit, public safety and education–were made, and Massachusetts ended the decade with an increase in population.

      According to UNH’s Carsey Institute: “Out-migration reduced the number of people in their 20s in New Hampshire in each of the last two decades. During the 1990s this outflow was modest, with a loss of roughly 5,600 (4 percent). The loss was greater between 2000 and 2010, when the estimated net outflow was 18,000 (10.6 percent).” Gubernatorial candidates from both parties can tell you this is a serious problem as the state looks to grow its economy. But is it any surprise, given New Hampshire’s dead last funding of higher education coupled with its highest student debt burden, that young people continue to leave the state for cheaper education and higher paying jobs elsewhere? And is it any surprise, given stagnating wages and decreased employment security, that people of all ages would increasingly prefer to live where their tax aren’t based inflexibly on the value of their home, but on their earnings and their ability to pay?

      You assert that the current tax structure is the reason why New Hampshire has a high median income and low unemployment. But there’s nothing other than anecdotes to back that up. And since Massachusetts and Connecticut, states with income and sales taxes, have higher median incomes, and Vermont, with its higher taxes, has a lower unemployment rate, it just doesn’t hold. Maybe the current tax structure does benefit border suburbs like Salem and Pelham, but when business taxes are more expensive and amenities less abundant in New Hampshire than Massachusetts, it certainly doesn’t benefit Manchester or the state as a whole. Like the cigarette tax cut, the current tax structure can really only benefit a few border suburbs, at the expensive of the rest of the state. And like the failed cigarette tax, which failed to increase sales, it probably doesn’t even benefit those towns either.

      We cited and quoted both the Union Leader and the Boston Globe–when their articles make the same point, it’s hard to argue that there’s a shared political bias. But this author does have an agenda–that Manchester needs to position itself as affordable, vibrant, urban alternative to cities like Boston, Providence and Portland; and that New Hampshire needs to reconsider its tax structure if it is to remain competitive and attractive in the 21st century. The neighborhood with by far the highest population increase between 2000 and 2010 was downtown–and people living there want urban amenities, quality education and a good infrastructure. So too do businesses there, which need to recruit workers, and build strong businesses. Placing an undue tax burden on those businesses and their middle-class employees, while failing to offer adequate amenities, isn’t a good strategy for growing the economy.

      1. Outside of the discussion itself, I didn’t see that Cathrine’s post was in any way, uncivil. There was no cursing, no name calling, no belittling of someone on a personal level. She just made her opinions known. If her post was uncivil, then the reply was equally uncivil as it’s tone was similar. Her comment stated that she felt the author was either ignorant or purposely lying about certain facts. The reply accused her of being unable to do simple research and was pointedly condescending.

        Just my personal opinion on this.

      2. Dear Author,

        Civility and respect are, indeed, the name of the game in NH culture. I do regret I could have been more tactful in my statement. I merely cut and pasted my comments to a friend, and should have considered my audience. I sincerely apologize for hurting your feelings.

        However, I must say I stand behind my factual statements.

        I haven’t the time to fully research a response to your long and considerate comment today, and you provided no citation for your claims in the article and only one in your rebuttal. So, I will reciprocate with one more citation:

        According to the most recent census (2010), NH has had more than twice the population growth of Massachusetts:

        I will point out that 2005 is not “12 years ago”, so I see you continue to play loosely with the facts. In fact, any political piece has some political agenda from the author, and to deny so is also dishonest or a lack of self-awareness. I maintain you have a political agenda and are being dishonest. I mean not to accuse, but to speak the truth with civility. Statements like “[D]owntown… people living there want urban amenities,” are neither factual, nor even anecdotal, but rather pure willful speculation, I’m afraid. Statements like that further deepen my suspicion that you may not actually be a resident and do not have a sense for what New Hampshire’s culture wants.

        My sense is that you do not understand economics and, at best, you base your politico-economic conclusions on sentiment rather than fact. I also sense you will be closed to any politico-economic argument I put before you, so I won’t waste your time. I merely encourage you to investigate the clear, documented correlation (not anecdotal) between lower taxes, less regulation, and more economic growth.

        Again, I can only agree with your statement: “Placing an undue tax burden on those businesses and their middle-class employees, while failing to offer adequate amenities, isn’t a good strategy for growing the economy.”

        Good luck with your endeavors and I appreciate this opportunity for discourse.

        In sincerity,
        Catherine 🙂

      3. Catherine, you didn’t hurt my feelings; you insulted my character and my integrity. It’s easy to make quick and sometimes untactful response online, and I’ve certainly been guilty of doing so myself. No hard feelings.

        Now, as to your assertion that I said that 2005 was 12 years ago, I think it’s pretty clear that I was referring to your quote about about the 2000 census, not the article from 2005. Suggesting that as an example of me playing “loosely with the facts” is a pretty shallow accusation. You say that I haven’t cited any facts, but that’s inaccurate. The original post cited two articles specifically relating to the economy, and I updated it earlier today to link to a third article and a report, just issued, which very clearly lays out the data and facts discussed in the other articles. You’ll see more citations below.

        The original post is clearly an opinion piece, which always carries a bias, informed by facts. I was pretty clear about my agenda in my last response, and I agree that making any political or policy position clearly comes with a bias. My argument comes with my bias, just as your does with yours. I think that goes without saying. You seem to be insinuating, however, that I have some deeper agenda, and accuse me of being “dishonest” about it, which is insulting, unfounded and unwarranted.

        Further, if you read the About page on this website, you will see that I am quite open about my biography. I am a Manchester native (as are my parents and three of my grandparents), currently living in the Boston area. In fact, I am one of the many (relatively) young New Hampshire natives who left the state for college (in my case because of my career choice–NH has no accredited architecture schools) and got a job in Boston after graduating. In no small part because of the high cost-of-living here and my affection for northern New England (not to mention the genetic aversion to having a Mass. ID that seems to come from being born in NH), I plan to move to a smaller, more affordable city in New England in the coming years. I write (quite openly) as–and will not apologize for being–a native who cares deeply about his hometown, wants to see it thrive, is interested in (and frankly knowledgeable about) urban planning, and as a possible future resident.

        I am not an economist, and admitted in the original post to not being a tax policy expert. So you’d be right to accuse me of writing speculatively if I had just written my own thoughts and ideas on the topic. But I cited, linked to and based the post on two articles from the (virulently anti-tax) Union Leader about both a panel discussion and a report, both written and delivered by experts, who backed up their findings with data, demographics and a deeper knowledge than I (and I presume you) could ever claim to have on the matter. To suggest that no one but experts can understand, report on or write about their findings is unrealistic.

        You are certainly right that New Hampshire grew at twice the rate of Massachusetts between 2000 and 2010. I never claimed otherwise. What I believe Mr. Gottlib–whose quote about Massachusetts’ economy and population growing faster than New Hampshire, I took from the Union Leader–was saying is that that has not been the case over the last few years. As you can see in Figure 1 from the New Hampshire’s Shifting Economic Trends report, most of New Hampshire’s population growth occurred in the early years of the 2000s. In fact, New Hampshire has experienced net out-migration (but still modest overall population growth) over the past few years. More people moving out of the state certainly does not speak to a robust economic climate.

        I can’t speak to the motivations of every person who moved downtown in the past decade, but given the extraordinary population growth there compared to the surrounding neighborhoods and suburbs*, it stands to reason that it may be part of a larger, national trend. For the first time in 100 years, cities are growing faster than their surrounding suburbs, and that trend accelerated in 2011, in large part due to young people who “are spurning homeownership in the suburbs for shorter-term, no-strings-attached apartment living, public transit and proximity to potential jobs in larger cities” showing an “interest in urban living” that may lead to “some longer-term changes such as decreased reliance on cars may be afoot.” That may not be the case in Downtown Manchester, but given the growth there compared to the surrounding neighborhoods and towns, it seems unlikely that people are moving downtown for big yards and driveways.

        We can both argue about what “New Hampshire’s culture wants,” but the fact is that the vast majority of people in New Hampshire want better amenities, like commuter rail. And the support for such projects by business groups, like the Manchester and Nashua chambers of commerce, illustrate the point made in the report that investment in such projects is critical for growing New Hampshire’s economy.

        I have no doubt that low taxes can lead to economic growth, but only to a certain point. The data in New Hampshire right now shows that low taxes alone aren’t enough: you need to invest in education, infrastructure and so on to attract businesses and residents. New Hampshire has a healthy, natural frugality and sense of thrift; I don’t think it will ever experience some of the high taxation or wasteful spending seen elsewhere, but there’s a balance between frugality and investment, and a difference between fiscal prudence with appropriate development and fiscal stinginess that leads to economic stagnation.

        We clearly have philosophical differences on this topic. I’m sure we won’t agree on how to get there, but I have no doubt that we want the same thing: to see a stronger economy in New Hampshire, and to see Manchester increasingly competitive and attractive compared to other cities in New England.


        *I should note that I previously mistakenly said that Downtown Manchester grew faster than any other neighborhood in the city between 2000 and 2010. In actuality, the previously largely undeveloped northwestern and northeastern corners of the city experience higher rates of population growth. Still, Downtown’s growth far outpaced all remaining neighborhoods–urban and suburban–in the city, as well as the surrounding towns. It can only be assumed that people moving downtown, and the growth in housing there since 2000 (such as the Residences at Manchester Place, and the Tower Mill apartments currently under construction) reflect a growing interest in an urban lifestyle as part of the national trend.

  2. For what it’s worth, I agree with the author that New Hampshire is beautiful and we should relieve the corporate taxes.

    1. The first part is indisputable, for sure. But how can you relieve corporate taxes, and provide the services that businesses and residents demand, without replacing the lost revenue?

      1. I would say it can be done the same way it is done is homes all over the country, cut the services that are least required. Not an easy task, but this seems to be a fundamental point of contention. What I don’t understand is why spending must always increase? No one else lives in the paradigm where increased revenues and spending are assured. Almost everyone who works has had a time in their lives when they take a pay cut, for one reason or another. I know I’ve had this happen more than one in my life and my answer has always been to spend less, until my income has increased enough to support previous spending limits. So why is public spending on some other dimensional plain of existence? At one time, we had a functioning society and had less public spending. We are a country and a people do not cease be if public spending is reducing at a pace with incoming revenue.

      2. What would you propose cutting? New Hampshire already has a bare bones government compared to most states. This election cycle, we’re hearing a lot about the need to cut different services and programs, but very little specifics about which ones. That’s probably because while most people don’t like paying taxes (who does?), when it comes to the programs the fund, most people would rather keep paying for them (and make those payments more equitable) than give up the services. In the current legislature, we saw budget cuts across the board–and in many cases, that meant cuts to programs, services and departments already operating on shoestring budgets. It also meant downshifting costs from the state to local communities, such as in Manchester, where education cuts helped lead to 161 layoffs. It’s true that throwing money at a problem won’t solve it, but it’s also true that you need to spend some money (wisely and efficiently) to invest in the future. And that’s true whether we’re talking about roads, rails, state parks (which bring a lot of tourists into the state) or schools. You can’t keep cutting and expecting things to improve, or for some private donors to fill in the gaps.

      3. The services (depending on which ones you are referring to) can and will be replaced through motivated and philanthropic individuals of which New Hampshire has many. Increasing revenue, or, more precisely, other taxes, will drain good-willed individuals of their ability to do such benevolent acts. These services will be maintained by eager individuals who have the choice to use (spend their own time or money on) these services.

      4. I wish this were the case. Since New Hampshire also ranks dead last in charitable giving (followed closely by the rest of New England), however, I don’t see how this could work. It’s clear that we have different political points of view, so we’ll probably disagree on this, but I’d also argue that we have shared responsibilities. We all benefit from offering quality education, good roads and infrastructure, and services for those in need, so I think we have a shared commitment to pay for those things. And there are things, like railroads and highways, that aren’t profitable in and of themselves, but which spur economic development and a higher quality of life.

        Whether we pay for those things through an income tax or some other means isn’t the point so much as is the fact–shown in the reports and demographics linked–that the current system isn’t working. But we’ve always agreed that there are certain things that we can’t do alone, but need to commit to do as a community. In New Hampshire, that legacy dates from the public funding of farms for the poor to public funds spent on roads and buildings, from a property tax that dates from a time when income could be measured in property to our meeting annually (in towns, at least) to tax ourselves for the things we need and want in our communities.

      5. I would agree that in living in a community, individuals have a responsibility to live in harmony with that community. That means following the laws and tax structures in place. The way to change these is through the system, not by being a one person protester. (Just a personal thing)

        However, I disagree that our education is of any sort of decent quality. Money does not a good education make, as the last 50 years or so has shown. We keep pumping more money into the education system, but test scores and basic problem solving skills get lower every year. There is a horrid amount of waste in the current education system, not from teachers, but from an increasingly growing, parasitic and mostly useless bureaucracy. We could easily spend half of what we spend now on education simply by cutting said bureaucracy and allowing teachers to teach without forcing them to be in the union.

        And I would also point out that roads and bridges, save those run by the state and interstate, are taken care of by each city and town those roads are in. I would also like to point out that a great many of the roads built in the state are built by the contractors who build buildings and homes on those same roads, then they are given over to the city or town when the development is done. It’s a trade off that many towns do, in order to get permits to build in said city or town, the contractor agrees to build the roads. Most roads can be built privately, and many already are.

        My main point here though is that these things, which are always held up as the primary reason for taxes, are not the things that are costing us the most money. In fact, the big taxes that are cited, income, property and sales, while too high in many regards, are not the ones strangling us. There is a vast plethora of hidden taxes, fees, fines and levies that raise the price of everything under the sun, and the revenue from those taxes don’t go to providing or sustaining the basic services we are being led to talk about. They go to support a huge level of spending on things government has no business being involved in. Most insidious of all is that many of these taxes are levied against businesses and we are fed the lie that they pay them out of coffers of mysterious money they print in vast quantities in back rooms. In reality, these taxes, fees, fines, etc. are passed on to the consumers of the goods and services, since these fees, et al, are part of the cost of operating a business. And then when those businesses do raise their prices, they are demonized for being greedy, and that justifies levying even more taxes on them as punishment. Thus an endless cycle of blame, and more money is leeched out of the system to pay for more services to help those who are now having trouble making ends meet, and who were put in that position in the first place by the taxes levied to ‘help’ them.

        It’s an unintended consequence from people who either A: Don’t understand the system enough to see the end results of what they are doing or B: people who know exactly what they are doing, but choose to do so for the sake of power. I know B is a hard one to swallow, but we all know petty tyrants in our lives who do indeed revel in and strive to keep the power they have. It is a normal human flaw, like greed, vanity, etc, and as such needs to be recognized as one that some people in politics suffer from. I lay the blame for category A at the feet of a failing education system that no longer teaches people how to think critically.

        So to sum up, no I don’t think we disagree all that much “that we have shared responsibilities. We all benefit from offering quality education, good roads and infrastructure, and services for those in need.” What we disagree on is how those needs should best be met, and weather those needs are indeed being met, and that there is far more at play than these simple and basic services.

  3. A note on the article itself, I find the idea that our chosen form of taxation and governmental involvement is a gimmick. You don’t have to insult us to make a point and there isn’t just one true and pure way to run a state. Different doesn’t mean deception.

    1. Didn’t mean to insult by using the word “gimmick.” By gimmick, I meant that New Hampshire relies, disproportionately, on peripheral revenue streams to fund infrastructure, education, services and programs, as a way to put off examining the unsustainable reliance on high property and business taxes. New Hampshire is notorious for its myriad fees, which are taxes by another word, and by definition calling them something else is a gimmick. New Hampshire is far from the only state to rely on gimmicks: Massachusetts is currently looking to casinos as a budget solution, when they should be probably be looking at more fundamental returns. I have no problem with state liquor stores (in fact, I like the idea) or arguing casinos on their merits, and looking to them for part of the funding, but no state should make such a drastic change in order to avoid a discussion about more fundamental reform. And calling New Hampshire “tax-free” when it has one of the highest meals & hospitality taxes, highest property taxes, and highest business taxes in the region is a gimmick.

  4. Catherine (and Mike Pelletier as well) hit so many good points I don’t feel the need to rebut so much of what you wrote… But I do need to correct some history and misperceptions you have in the most recent comment, Michael:

    1) New England’s stats on charitable giving are severely slanted incorrectly (it uses tax filings in general to track donations, and New England tends to be the silent supporters, especially NH.) The flinty NH folks are generous in private ways, not in ‘oh, I get a tax write off’ ways.

    2) The current system not working? I agree, but we probably disagree strongly on what they means. But the classic ‘who will build the roads?’ answer of taxes and government is not the only answer. In fact, you know who build the first major turnpikes in NH? Private companies. And the trend around the world is figuring out that government builds the worst functioning roads, supports trains/buses/etc with the worst ridership/scheduling/etc… and so on.

    I think you’d find that Catherine and others _agree_ with your wishes for an improved NH, and improved Manchester, but disagree with your solutions how to get there. Taxes must be paid for by someone, and if you think that taking money from everyone, for the purposes of building things that some (even a scant majority) want, when others wish to fund other projects instead, just put yourself into the viewpoint of the person who wants to fund project B (which doesn’t happen, because your money is going to project A against your wishes).

    Voluntary solutions, not force. Stop getting other people extract money for your ideas, and you’ll find you and others have more money for the ideas/projects you want to do instead. Win -Win.

    Kudos to Catherine for pointing out this blog post, and her replies. Always interesting in reading what people think of our State

    1. Thanks for commenting, Rep. Cohn. As far as I know, you’re the first state legislator to comment on LivableMHT!

      That may be true about charitable giving, and I hope it is. But without data, it’s pure conjecture, and that’s not a good basis on which to build a revenue system. This is also pure conjecture, but something I’ve wondered. In addition to New England–particularly Vermont and New Hampshire–being less religious than much of the rest of the nation and thus giving less in religious contributions, I wonder if our four centuries of self-government and self-taxing have predisposed us to looking more toward pooling resources as a community than as individuals? As I said, we have for 400 years, met every winter (sometimes more often) to decide whether and how much to bind together to build meetinghouses, roads, schools, to care for the indigent, and so on. I’d argue that we expect more from our communities, and by and large are more willing to contribute as a community (so long as we have a voice), and so we might not expect as much from individual giving. Now, volunteerism and other non-monetary giving is a completely different story.

      You’re right about the earlier New Hampshire turnpikes–I recall that from one of my favorite high school classes, New Hampshire History. The same is true of the first canal in Manchester. But it’s important to note that these were corporations chartered by the state for a specific purpose: building and maintaining a turnpike or canal. The same is true of the trolley lines that used to serve towns and cities in New Hampshire, which were usually built by electric companies or developers. And eventually those privately built roads, canals and trolley lines came to be owned by the public as their profitability waned. Sounds a lot like the privatization of profit and the publicization of loss that we saw with the recent Wall Street mess.

      In any event, I can’t see any private corporation–especially in this age of favoring short-term profit over long-term viability–stepping up to make the massive investments needed in infrastructure, education and so forth. Like the canals, railroad, roads and trolley lines of the past, though, these things don’t just serve people, but increase economic viability for private businesses, as well. There are some interesting public-private partnerships, such as the city-owned Portland Streetcar in Oregon that has reaped lots of private sponsorship, that may be a clue to the future. But I can’t see a return to 18th and 19th infrastructure funding models–not when costs are so much higher, and when the definition and responsibilities of corporations have so radically changed.

      Thanks for the vigorous discussion and exchange of ideas!

  5. I’ll admit I’m a proud Republican and oppose either an income or sales tax but there we do need to increase government funding somehow to reinvest on our state. Otherwise it just isn’t going to succeed. I was thinking of something a few days ago. Is it possible to institute an income tax only on people who live out of state but work in NH? I would imagine that kind of structure would help to both up revenue for people who use NH’s roads and services but also encourage residents of ME, MA, and VT to consider moving to NH to avoid an income tax even if the property tax is higher. Anybody think this may work?

    1. It’s an interesting idea, OSU. I’m not sure how that would work, or if it would be legal, but I’d bet that surrounding states would implement similar measures if NH started taxing only out-of-state residents. You could argue that some of NH’s tolls (especially on I-95) and taxes (most of the hospitality tax) are targeted at out-of-state visitors, so there’s definitely some precedence. And my understanding (which could be mistaken) is that Maine taxes the income of spouses of out-of-state workers even if they do not work in Maine, so in a sense New Hampshire could just be following suit.

      Another idea I’ve heard is that if a new tax structure were implemented in New Hampshire (whether income, LVT or something else), is that property owners might be given a “homestead exemption” so that only secondary property (vacation homes, etc.) would be taxed (or taxed more). In effect, most New Hampshire residents would get significant property tax relief.

      In any event, it’s just this sort of discussion that New Hampshire needs to have. There’s no doubt that New Hampshire’s relatively low (except property, business, meals and hospitality…) taxes has helped the state grow its economy in the past. But it’s becoming increasingly clear that this low tax mantra is no longer enough to attract businesses and residents, and that the current tax structure is falling far short of being able to pay for the investments needed to continue to grow the economy. What’s needed now is some sort of balance between a favorable tax structure and investment–and the conversation about how to get there and what that balance will look like.

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