Corporate tax rates for New Hampshire businesses have drawn even with our neighboring states after years of cuts, and NH businesses are showing record profits along with nearly every established business in the United States thanks to a robust economy.
As introduced, House Bill 1422 called for yet another cut to the business profits tax (BPT), the rooms and meals tax and the communications tax that could reduce revenue to New Hampshire by over $2 billion dollars over the next 6 years, according to an analysis by the NH Department of Revenue Administration. The hearing on HB 1422 produced no evidence that recent tax cuts have either enticed new businesses to come to New Hampshire or encouraged material expansion of those already here. In fact, the continuation of years of tax cuts may even destroy the economic momentum we have recently seen by depleting state resources that both residents and businesses rely on.
Smart businesspeople in NH know that the best way to keep growing our economy is to fill the vacant jobs, with a healthy, educated workforce who can afford to live in this state. The BIA has made this clear to the Ways and Means Committee year after year and our committee heard NO testimony from the Business and Industry Association (BIA) or any business endorsing the continued tax reduction proposed in HB 1422. Property taxes are a bigger concern than reducing the BPT. In fact, only 20 percent of businesses pay 80 percent of the business profits tax with most NH businesses paying nothing at all.
The annual corporate tax giveaway of $350 million proposed in HB 1422 will cost as much as it takes to fund the very agencies and services that business and our citizens rely on including the Dept. of Safety, Veterans Home, University and Community College systems combined, Child Protection Services, Housing and Homelessness services, Mental Health Services, and Drug and Alcohol Services combined at HHS, and the Division of Medicaid Services.
The tax issue we should focus on is the regressive and punitive property tax situation faced by both business and personal property taxpayers. Bills like HB 1422 may only force local communities to raise property taxes to cover for the many services the like public education, public workers’ pensions, and vital health services now provided by NH Department of Health and Human Services, to name a few.
Today, 52 percent of New Hampshire’s tax base comes from the property tax. While the state of NH has little to no control over these taxes, HB 1422 will further reduce statewide revenue forcing businesses and Granite State property taxpayers to pay even higher property taxes.
HB 1422 has temporarily died in the Ways and Means Committee after House Republicans said that this should be looked at next year when we put together the budget. Several members of the House Republican leadership signed off on this bill so I’m sure we will see this again.