TAXES

Creating Tax Loopholes

A bill in the state Legislature that would create a tax loophole and decrease state revenues by millions recently slipped through the N.H. House.

HB 1686 broadens the Education Tax Credit (ETC) program beyond businessess to allow individual interest-and-dividends taxpayers to participate as well. Currently, businesses donate money to an education scholarship organizational and receive credits against their business-profits tax. Individuals participating would receive credits against their I&D taxes.

Stacking state ETCs with charitable tax deductions at the federal level, wealthy taxpayers would end up receiving more money back than they donated. With a return on investment exceeding 20 percent, it won’t take very long for financial planners and tax accountants to make this very, very popular.

I serve on the House Ways and Means Committee and voted against this scheme, and the April 10, 2018 edition of the Union Leader agrees that this type of “carve out” is not a good idea, writing that, “when politicians carve up the tax code with exemptions and special breaks, it means someone else ends up paying more.” They are right.

In their editorial, they also point out that a recent move by Ways and Means to lower real estate transfer taxes would help first time homebuyers, the Legislature should lower the rate for everyone. Creating a lower rate for favored class of homebuyers is social engineering, and bad policy.

I also voted against this bill in committee and will be voting against it when it comes to the floor.