TAXES

NH House Votes To Freeze Business Profits and Enterprise Taxes

This bill freezes the business profits and business enterprise tax rates at the levels paid for tax year 2018, rather than allow them to descend further. Relatively small changes in tax rates are much less important to businesses than workforce issues (training and basic education, physical and mental health and addiction, housing, workforce renewal in an aging population), transportation, energy costs, client-friendly permitting, quality of life and a functioning legal system.

Most of these areas are ones that the state plays an important role in, and that we have been progressively underfunding for years. When times were good, the legislature cut revenues rather than adequately fund the contractors and state employees that carry out the work of government. When the economy slowed, we cut employees and further underpaid contractors, reducing services to businesses and citizens alike. And we cut multiple revenues to the municipalities and counties, directly increasing the property tax. Businesses pay that tax too.

The business-funded Council on State Taxation reports yearly that in our state, almost half of
all taxes, fees, and other charges levied on businesses are property tax, while the business taxes come in a poor second. The current group of business tax rate cuts, if left unchecked, will reduce our total general and education trust fund revenues by 6% from 2016-22, assuming a constant economy. The cuts have not generated new revenues: the first set followed a normal recovery – normal for our state – in 2015, and the second coincided with the massive federal stimulus passed in December 2017. When we next have a recession (many predict 2020) we will emerge with revenues that require major cuts in state-level spending, due to the tax cuts. And more will be down-shifted to the property tax, which is already almost two-thirds of our entire tax
system.