Face it, Governor, you need a 'Plan B'

The Union Leader, Nashua Telegraph, Fosters, and Concord Monitor don't sing in harmony all that often. Yet all three editorial pages are joining the chorus calling for Governor John Lynch to acknowledge the reality that his plan to take $110 from the Joint Underwriting Association is growing less and less likely. Here's the Monitor's take.

Not discussing a Plan B is unfair to the people who may become Plan B. House Finance Chairwoman Marjorie Smith has cited plans to tax estates worth more than $2 million and a capital gains tax as revenue possibilities that could be adopted if needed. Those levies would raise an estimated $85 million. Both are good and viable alternatives. But people who may wind up paying such levies deserve time to make financial preparations. So do the state's businesses and other potential sources of revenue. (more)

Greg Moore: A NH capital gains tax would hit more than the wealthy

Greg Moore writes in the Union Leader about how raising taxes on capital gains will do more than soak the rich:

Capital gains come from good investments. These could be stock options at work, your 401(k) plan or your house that was improved with sweat equity or a new addition. If the risk you take pays off for your retirement, your home or your investment, the capital gain is the difference between the price when you bought and the price when you sold.

The House wants the state to be a silent partner to your successes, taking a portion of your hard-earned investment.

He also examines how taxing success would hurt New Hampshire towns and make the state less competitive:

This new tax would also hurt local communities. A detailed study by the National Bureau of Economic Research shows that capital gains taxes reduce asset values. Thus, an income tax on capital gains would depress sale prices for homes across New Hampshire, which would lower property assessments and reduce the tax base for these communities. Many cities and towns would respond by raising their property tax rates, hurting low- and middle-income homeowners, especially people on fixed incomes, like seniors.

Read the whole thing.

Valley News reports key opposition to Cap Gains

John Gregg reports in the Valley News that two Senate Committee Chairmen oppose instituting a Capital Gains Tax on New Hampshire:

2 N.H. Legislators Frown on New Tax

By John P. Gregg

Valley News Staff Writer

Prospects for passage of a capital gains tax in New Hampshire appear uncertain, with two key Senate committee chairmen yesterday saying they are opposed to the measure.

“I can only tell you that I have no desire to do a capital gains tax,” Senate Finance Committee Chairman Lou D'Allesandro, a Manchester Democrat, said in a phone interview. “If ever there was not a time for capital gains, it is now.”

Senate Ways and Means Chairman Bob Odell, a Claremont-area Republican, also said he opposes the tax, noting that many retirees move to New Hampshire because of its favorable tax climate for such income. “I think it would be a major change in the public policy we have on taxes,” Odell said. “I think that will get a lot of discussion and debate if it is brought forward. I haven't heard a lot of sentiment in the Senate for that particular tax.”

Capital gains tax would harm state's workforce

It's been a busy few days here at NHWatchdog, and I missed Bill Ardinger's piece in the Concord Monitor outlining why taxing capital gains will harm far more than the "rich":

New Hampshire's capacity over the next decade to provide a good economy with good jobs for its citizens will depend on its ability to attract capital from people who are willing to take risks to create new businesses and jobs. And make no mistake about it, decisions by entrepreneurs to invest capital are always made on an "after-tax" basis, and are therefore highly sensitive to tax differences among jurisdictions.

Without question (at least before Wednesday, when the House voted in favor of a capital gains tax), New Hampshire's top competitive advantage compared with other states is in the market for entrepreneurs. We offer these job-creating agents a range of important benefits: access to an educated labor force; a good public school system for their children and their employees' children; no sales or use tax on items purchased by the business; no income tax on wages paid to workers; and no capital gains tax if the business is successful. In effect, just miles north of Boston, we offer a highly competitive "product" to attract entrepreneurial capital and jobs from larger economic centers.

Budget Roundup

Lots of coverage of yesterday's budget debate in the House, where Democrats pushed through an 11% increase in overall spending and a slew of new and increased taxes largely along party lines.

In the Concord Monitor, Lauren Dorgan outlines who will pay for the spending spree:

Few are untouched under the House budget plan, which largely follows that proposed by Democratic Gov. John Lynch. One key difference: While Lynch expected current state revenue to hold steady for the next two years, House budget crafters foresaw a $140 million decline.

Drivers, gamblers, smokers, diners and hotel patrons would all pay new or increased taxes.

The state's wealthiest residents would pay two new taxes crafted by House budget writers: an 8 percent estate tax on inherited estates above a $2 million threshold and the 5 percent capital gains tax on all gains over $5,000 per person. The estate tax is expected to reel in $10 million over two years, while the capital gains tax is expected to bring in $75 million.

State employees who aren't laid off will pay more into their pension system - and those who are laid off would lose for the next two years their "bumping rights," seniority protections fiercely guarded by unions that allow more senior employees to bump junior employees from their jobs. Retired state employees who are under the age of 65 would no longer have free state-provided health insurance; they'd have to pay 11.5 percent of their pensions.

In the Nashua Telegraph, Kevin Landrigan lists jsut some of the many changes to the state's finances:

Among its 197 state law changes to accommodate the budget, the trailer bill would create a new saltwater fishing license of $15 a year and raise annual boat fees and the cost of a motor vehicle inspection sticker along with other fee increases.

It also withdraws $110 million from a quasi-public authority set up 30 years ago to help physicians afford medical malpractice insurance.

Opponents noted the state did not invest any money in this authority and physicians would likely challenge in court the state's right to claim any of it.

Supporters said this move still leaves a $50 million surplus in the account.

Rep. David Hess, R-Hooksett, said taxing capital gains would stifle investment and cause some of the state's wealthiest residents to leave.

"We are targeting first of all our best, our brightest and our most successful," Hess said.

Rep. Robert Walsh, D-Manchester, said the state cannot afford to do without the $75 million the capital gains levy would bring in and taxes only those who made large investment profits.

"This measure will only affect those citizens with an ability to pay," Walsh said.

Tom Fahey outlines some of the policy changes in the bill in this morning's Union Leasder:

In addition to the tax package, the bill makes changes that allow four district courts to close; give the liquor commission flexibility to close stores and sign agreements with private stores; allow tracks to simulcast races from other locations without running live race events, and allow the commercialization of state welcome centers and rest areas.

The bill also eliminates bumping rights among state workers, 250 of whom are expected to be laid off.

House backs $200M in higher taxes

On the Union Leader's online page, Tom Fahey summarizes some of the new taxes approved by the New Hampshire House this afternoon:

The tax changes are expected to raise $202.5 million over the next two years to support government operations. The gas tax increase should bring in another $125 million, with $37 million of it headed to cities and towns for upkeep of local roads.

Rep. Marjorie Smith, D-Durham, chair of the House Finance committee, said the tax package does not include a broad-based tax, such as sales or income tax.

“It is the best mix we could come up with of revenues that will not bring harm to our economy or our neighbors,” Smith said.

Rep. Neal Kurk, R-Weare, criticized the tax plan and the budget. “We have adopted a budget that spends more than we can afford within our existing tax structure, and the response has been to raise taxes to pay for higher spending,” he said.

Democrats argued that in a deep recession in 1990, Republicans raised and created a series of taxes.

”What we have all day long … is ‘Do as I say, not as I did’,” majority floor leader Rep. Daniel Eaton, D-Stoddard, said, prompting a few boos.

Republicans tried to kill each of the tax measures, but were beaten back each time by the Democratic majority.

For fairness's sake, tax estates, capital gains

In all the budget coverage this morning, I missed the Concord Monitor editorial in favor taxing both capital gains and inheritences, just to be fair:

The "death tax" re-branding was a misnomer. The tax really falls on the inheritors of an estate and should be called the "lucky survivors tax," since if you die before the owner of the estate dies, you lose. In that sense, the inheritance tax is no different than a tax on gambling winnings.

There you have it. Trying to keep a farm or small business in the family is just like buying a lottery ticket. The Monitor concludes its argument with the first and last chorus of all taxers, the government needs the money:

This year more than ever, the state needs the money. Gov. John Lynch and the Legislature have been curbing services to people who really need them, postponing projects and planning to lay off hundreds of state employees. An estate tax and capital gains tax aren't the answer to New Hampshire's chronic revenue woes and unfair tax structure, but they are a step in the right direction.