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Wednesday, October 21, 2009

Live Blogging the Tax Summit- Daphne Kenyon

Daphne Kenyon- Economist and visiting fellow at Lincoln Institute of Land Policy. Kenyon also serves on the New Hampshire Board of Education and Windham School Board.

Dr. Kenyon points out that New Hampshire has by far the highest reliance on property taxes as a share of total state and local revenues, and is the only state to generate over 40% of its total revenue from property taxes.

She also outlines the pros and cons of the current structure.

*Property tax adds revenue stability
*Property tax well suited to use by local governments
*Lack of broad based income or sales tax likely to keep overall tax burden low

She cites statistics from the U.S. Census Bureau showing New Hampshire has a total state and local tax burden of $88.20 per $1,000 of personal income, ranking 44th highest in the nation.

*Unmet expenditure needs
*Relying too heavily on any one tax accentuates its weaknesses
*Inexact relationship between property tax burden and ability to pay taxes (e.g. job loss, divorce or illness will not reduce tax burden)

She references the American Community Survey, which shows that property taxes exceed more than 5% of income for over half of New Hampshire households, which is higher than any other New England state.

Kenyon says several states have adopted sales or income taxes since 1960. She finds that state's adopting new broad based taxes have not shifted their tax burden, but instead increased it. Connecticut and Maine have increased their relative tax burden since putting in the income tax, expanding their public sector. She points out that Massachusetts and Vermont have lowered their relative tax burden since adopting a sales tax. New Jersey, which put in both a sales and income tax since 1960, increased its tax burden relative to the national average.

Kenyon looks at public opinion on broad based taxes in New Hampshire since 1968. The Becker Poll shows overall disapproval of broad based taxes through the year, though the gap narrow significantly in 1991 and 2001. Kenyon points out that opposition peaked again following Arnie Arnesen and Mark Fernald's campaigns for Governor on a pro-income tax platform. She points out that opposition has gone up 12% in 2008 alone.

Kenyon looks at the property tax circuit breaker and shows that New Hampshire's program is very small compared to neighboring states, mostly because it only applies to state property taxes and not local property taxes.

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