New Hampshire Lowers Taxes, Raises Revenue

by Rob Roper

The New Hampshire Union Leader recently posted an editorial about their legislature’s 2015 decision to cut taxes on New Hampshire businesses. The tax cuts are still in the process of being phased in, but when fully implemented, the Business Profits Tax will be reduced by nearly 12 percent, and the Business Enterprise Tax by 33 percent.

When these tax cuts passed, the article reports, “State House Democrats warned that shaving the state’s high tax rates slightly would ‘blow a hole in the budget.’”

Nope:

According to the Department of Administrative Services’s monthly revenue report, general and education fund revenues were $5.5 million ahead of the budget plan adopted earlier this year thanks to the state’s two main business taxes generating more revenue than anticipated. [emphasis added].

For the year to date, revenues are $11 million, or 1.6 percent, ahead of schedule.

This is important to mention for two reasons. First, there is the general lesson to be learned that when you reduce the barriers (such as cost) to doing business, you get more activity that generates more revenue. And, when you increase those costs you get less of both.

The second is the fact the New Hampshire, which we are all well aware has no income or sales taxes, is taking steps to make their business climate even more competitive. And, it’s working.

Let’s hope Vermont’s legislature considers both of these lessons as they debate things like $15 minimum wage, a new payroll tax to cover the cost of a government-run Paid Family Leave insurance program, and a Carbon Tax.

Rob Roper is president of the Ethan Allen Institute

{ 4 comments… read them below or add one }

Ritva Burton December 13, 2017 at 2:35 am

It appears that the VT legislature needs to look at NH as an example to follow!

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William Hays December 16, 2017 at 4:51 am

Hard to do, in a state that is overrun with Socialist-Progressive and not-a-few RINOs. I must say that I am disappointed with Gov. Scott, so far.

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Bob Robertson December 13, 2017 at 12:52 pm

Sadly, there are several very loud voices in NH who want bigger government and higher taxes. I consider it possible the legislature might give in to them just to shut them up, which of course never works.

Cutting things like licensing requirements does great things as well. Trade licensing crushes innovation and business development.

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William Hays December 16, 2017 at 4:55 am

Hard to do, in a state that is harboring the dregs of Massachusetts’ ex-pats. A legislature of over 500 solons doesn’t help. How do they get anything done?

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