A Narrow Victory for the New Hampshire Economic Recovery Coalition

That was a close one. Forces in Maine tried to remove our neighbors from the New Hampshire Economic Recovery Coalition by lowering Maine's income tax.

A law that would have lowered the state's income tax but imposed sales taxes on a variety of services is on hold now that opponents have collected enough signatures to place a repeal of the law on the June 2010 ballot.

Maine's secretary of state announced Nov. 9 that sufficient signatures had been collected.

The bill to revamp the state's tax system was approved by the Maine Legislature in June and signed by the governor.

Following last week's rejection of the Spending Cap, Maine is clearly doing its part to help the Granite State. But hold off on the celebratory parades in Portsmouth and North Conway. Maine voters have a chance to reinstate the lower income tax rate next year.

Keep talking about state's tax structure

The Concord Monitor wishes that critics of this week's Tax Summit are right, and that it was a step closer to an income tax in New Hampshire.

Yesterday, lawmakers attended the second day of a two-day summit held by the House Ways and Means Committee to hear testimony about New Hampshire's tax structure. Because the committee's chairwoman, Democratic Rep. Susan Almy of Lebanon, has voiced support for an income tax in the past, some Republicans, including Hess, saw the event as part of a conspiracy to kill the so-called New Hampshire advantage that comes with not having a general sales or income tax.

The committee was careful to ensure that the representatives of both sides of the issue had a chance to air their views. That didn't quiet critics who treat the state's unfair tax structure like previous generations treated suicide, cancer and divorce, something that should not to be discussed in public. But silence allows ignorance to prevail and problems to worsen. Putting all the options as all parties see them on the table, as the committee did, is a wise approach.

The Tax Summit on WMUR, Part 2

WMUR's Sean McDonald discusses the upcoming "Tax Summit" with NH Democratic Party Executive Director Mike Brunelle and Kevin Smith of Cornerstone Policy Research on yesterday's Close up NH.
Part 2

The Tax Summit on WMUR, Part 1

WMUR's Sean McDonald discusses the upcoming "Tax Summit" with NH Democratic Party Executive Director Mike Brunelle and Kevin Smith of Cornerstone Policy Research on yesterday's Close up NH.
Part 1

Charlie Arlinghaus- Sure, let's debate an income tax

BY CHARLES M. ARLINGHAUS

There's no topic so dangerous that it can't be talked about. Legislative leaders who want to have a discussion about taxes should be applauded, not castigated, for wanting to engage in open debate. That open debate should include ideas that you and I like, and ones we don't like as well.

The House Ways and Means Committee is the tax committee in the New Hampshire Legislature. The committee is planning a broad seminar with state and national analysts to examine New Hampshire's tax structure. So far, it sounds like a good idea. The difficulty for some is that Rep. Susan Almy, chairwoman of the committee, is quite open about the fact that she thinks an income tax would be a good idea.

I think her willingness to take a position is helpful to an open discussion and that an income tax ought to be discussed rather than being strictly forbidden as some would suggest. By this point, almost everyone in public life knows something about an income tax and has a position for or against it.

If we are to seriously discuss how taxes affect New Hampshire's economy, create incentives or disincentives for jobs, development, education, preservation or whatever, why would we place anything off limits? I believe an income tax is a bad idea, but I'm more than prepared to explain why in a discussion. If talking about it were dangerous to my belief, I'd have to rethink my belief. In fact, I want to talk about it in the hopes of convincing others. That's generally the idea behind debate.

The reason we're having this discussion is that there is a significant budget problem. It is neither the greatest calamity in the history of the state, as some suggest, nor a minor blip that will go away when the economy picks up again, as others have said.

Temporary revenues, such as the Washington bailout money, and temporary spending changes mean the starting hole for the next budget will be just more than $600 million (we raise about $5 billion over two years from general state taxes and fees). That hole may get worse if taxes fall short of the budgeted projections. The first two months of returns are worrisome, although not definitive.

In that climate, should we have a discussion about taxes? Absolutely. Should we limit that discussion in particular ways? No. Let's talk about whether business taxes are creating a competitive disadvantage, the mix of state versus local taxation, the impact of our taxes on cross-border sales, the cumulative burden of taxes, everything and anything.

But just as we shouldn't limit the discussion of taxes, neither should we limit the discussion to taxes. The governor has established a commission to discuss expanded gambling as a potential revenue source in New Hampshire. Its conclusions will be necessarily incomplete because it won't include all taxation and all spending.

A forum run by the Ways and Means Committee can look at incentives and disincentives of taxation, but probably can't discuss spending without getting into turf battles with other parts of the Legislature.

Just as a complete discussion of taxation must include all taxation, a complete discussion of the state's budget difficulties must include both the spending and taxation sides of the equation.

A gambling commission can present the likely positive and negative impacts of that form of raising revenue, but it doesn't tell policy makers whether the step is necessary. It doesn't address the ways we can spend less money that might be weighed against the costs and benefits of gambling.

We should expect an honest discussion of taxation to have the same limitations. Past commissions have started with the assumption that more money is required: "Which method is the least onerous way of increasing the amount of money we take from people through taxation?"

Putting the cart before the horse in that way leads to bad decision making. So far this year, a total of 41 taxes and fees have been raised. They weren't raised because careful analysis decided that these 41 were a good package and made sense in the economic context of our other taxes. On the contrary, much of it occurred in the hustle and bustle at the end of the budget process without due deliberation of the state's total revenue structure and its economic impact.

Those of us who felt that no taxes at all should be raised during a recession believed what we did because of the economic impact of taxation. As such, we should welcome a more deliberative and less hurried discussion of taxes and the economy.

I agree with the character in the movie "1776" who said "I've never seen, heard, nor smelled an issue that was so dangerous it couldn't be talked about. I'm for debating anything."

Charles M. Arlinghaus is president of the Josiah Bartlett Center for Public Policy, a free-market think tank in Concord.

Ross Gittell Address House Ways and Means- Part 3

UNH Professor Ross Gittell addresses the House Ways and Means Subcommittee studying an income tax bill.

Ross Gittell Address House Ways and Means- Part 2

UNH Professor Ross Gittell addresses the House Ways and Means Subcommittee studying an income tax bill.

Ross Gittell Address House Ways and Means- Part 1

UNH Professor Ross Gittell addresses the House Ways and Means Subcommittee studying an income tax bill.

Committee urged to consider sales tax

Tom Fahey reports in the Union Leader on a House Ways and Means subcommittee opening its study of an income tax bill by hearing from a sales tax advocate.

Gittell said the bill would hit businesses and wealthy individuals hardest. It would also have a disproportionate effect on those who live along the Massachusetts border, where real estate values are higher.

He said any tax policy should tax what a state wants to discourage, leave alone what it wants to encourage, be kept simple, stable and at rates below bordering states. When times are flush, money should be set aside for lean times that inevitably follow, he said.

He offered a sales tax as a solution along those lines, and said it would gradually lower the state's ranking as nation's second highest concentration of retail jobs. He said the jobs pay low and offer little advancement opportunity.

Susan's secret: Pitching an income tax

The Union Leader is not surprised that long-time income tax supporters are laying the groundwork for an income tax.

This year her committee recommended, and she advocated, an estate tax and a capital gains tax. She's spent years searching for ways to raise taxes on Granite Staters. That she's organizing the summit is worrisome. That she deliberately kept it a secret because, she acknowledges, she didn't want the income tax information to get out, is troubling.

House Speaker Terie Norelli, who voted for an income tax in 1999, says not to fret. She admits that the income tax will be on the table during the summit, but she notes that Gov. John Lynch has pledged to veto it, so it's off the table in the Legislature. So why not take it off the table at the summit, then? If it's really not an option, why consider it?

The answer, obviously, is that they are considering it, and they hope to convince enough legislators to support it that Lynch's veto won't matter.

Get Ready for the Fireworks

Shira Schoenberg leads off her "Capital Beat" column in the Concord Monitor with a slew of study commissions ranging from gambling to the Concord Charter to New Hampshire's tax structure.

House Speaker Terie Norelli, a Portsmouth Democrat, caused a firestorm when she told the Portsmouth Herald that she is "open-minded to taking a look at revenue structure in the state," including an income tax.

Although Norelli has been an advocate for an income tax in the past, she said when she was elected House speaker that she had no interest in pursuing that issue. "That question's been asked, (and) it's been answered by the governor, by the Senate president, by myself," she told the Monitor in 2006. "I think it's time for us to move on. "

For something that's off the table, they sure want to talk about it a lot.

Shhh, they're talking income tax

Tom Fahey leads his "Under the State House Dome" column in the Union Leader with more details on the Economic Summit that longtime income tax supporters Terie Norelli and Susan Almy are putting together, which they say will be about so much more than the income tax.

Norelli said the best time to look at the revenue landscape is when lawmakers don't have a budget gun pointed at their heads.

"It's an opportunity for us to take a look at all our taxes and fees. Do they help or hurt the economy, or are they neutral? What's good for economic development and what's bad? They will be hearing from economists on a national and state level on the right and on the left and, hopefully, in between, and there won't be any recommendation coming out of it. It's strictly giving people information," Norelli said.

Fahey notes that the House has held onto an income tax bill for further study. This bill could easily serve as the Legislative vehicle for any tax "reform" ideas coming out of Norelli's tax summit.

Fahey also updates the stalled contract talks between the state and the SEA, and has lots of political stuff.

Norelli upset at Income Tax Backlash

House Speaker Terie Norelli is hitting at critics who disliked her telling the Portsmouth Herald that she was open to all options for the New Hampshire budget, including an income tax. The Herald gets Norelli's reaction.

On Friday, she continued to maintain that such a broad-based look at revenue would be helpful.

“It's prudent to gather as much information as possible about everything we're doing outside of the pressure and constraints of budget gathering,” she said. “That includes everything, except for gambling because there's an independent commission looking at gambling. Why would anybody be afraid of looking at everything to see whether it's good or bad for our economy? It's irresponsible not to.”

She said she's upset with Republicans for what she seeks as grasping at straws. “They've got me conjuring up new taxes for the public,” she said. “They're making me look like an evil witch. They've been given every opportunity to participate in the process. For them to put out there that I'm going to be putting out an income tax is nothing more than a cheap political trick.”

Terie Norelli is an income-tax supporter. She's voted for it in the past, and been quite eloquent about what she sees as a lack of steady revenue for the workings of New Hampshire government. When asked by the Herald about the possibility of an income tax, she could have said many things.

She could have said that she used to support one, but know thinks it's a bad idea.

She could have said that as long as John Lynch is Governor, there is no prospect for an income tax.

She could have simply said that the House will not be considering an income tax when it returns.

She did not. She left the door open to all options, including the one she's voted for in the past. It is not unreasonable to conclude that Speaker Norelli continues to support an income tax, and that the Ways and Means Committee, chaired by income tax supporter Rep. Susan Almy, will report favorably on the idea this fall.

Speaker Norelli was asked if the Legislature would consider an income tax to balance the state budget. She could have said no. She choose not to, and now wishing us to ignore those words.

Norelli's mention of a state income tax alarms conservatives

If Terie Norelli's comments opening the door to an income tax was intended as a way to discuss New Hampshire's tax structure, I guess it worked. Tom Fahey reports in the Union Leader ron the immediate backlash to Norelli's pro-income tax article in the Portsmouth Herald.

Several Republican groups jumped on the remark as evidence that Norelli and other Democrats are ready to pass a tax they predict will damage the fragile economy. The phrase "out of touch with New Hampshire voters" appeared in a number of press releases criticizing Norelli.

Norelli, D-Portsmouth, said yesterday her remarks came during a discussion of a planned legislative review of the effect state tax policy has on its economy.

"I said I think we're looking at everything -- this is to look at all taxes and fees, existing and not existing," Norelli said.

This state employee will vote no

Peter Brunette, a field worker for a child protection unit and member of the State Employees Association, pens his opposition to the pending state contract in the pages of the Concord Monitor.

The underlying problem here is an appalling lack of courage on the part of our elected officials. The governor and our representatives in the House and Senate are so afraid of not being re-elected that they will not consider any legislation to raise the revenue necessary to provide essential services and property tax relief to its citizens. These pledge-taking, issue-dodging cowards continue the willful deceit that reduction of expenditures is the only way to balance the budget. Until and unless their moral character improves to the point that they are capable of doing what is right, and not just what is politically expedient, state employees and their union representatives will continue to be shown nothing but bad faith and disrespect.

Fiscal responsibility in state government must be achieved, but it has been unfairly dumped on its hard working and underpaid employees. I call upon all my union brothers and sisters to draw the line here, now before it is too late. Let us send a clear message that we are not going to take it anymore, and vote NO on the pending contract.

For all of Brunette's calls for political courage, he won't say which taxes he wants you to pay so that he can get a raise. If it's an income tax, Brunette would have to justify the massive transfer of wealth from the private sector to public employees. That's a valid choice, though not one likely to improve either the state's economy or its long-term fiscal health.

He bases his argument on the contention that state workers are underpaid. They are not. Public employees receive salaries similar to those in the private sector, generous benefits, large but underfunded pension promises, and job security and work rules unimaginable in most private sector jobs. Brunette is a member of a union that has the right to accept or reject the contract being proposed. He is under no obligation to accept it. But if he thinks the people of New Hampshire are currently in a position to offer him more, he has chosen not to accept reality.