Every dollar forcibly taken from the private sector is a dollar not available to finance growth and create jobs. Now the Democrats in charge must bob and weave themselves around these obvious facts, but the state budget is still broken due to the spending of Step 1.
A series of federal handouts have obscured the problem, but it is still here. We spend more than we have, and if we take more taxes, unemployment worsens.
It was not always so and it need not be. Most people live within their means and know how to restrain the wants to fund the musts. But politicians have proven they cannot be trusted to do the same. Spending begets power and buys votes, so they spend.
Showing posts with label Tax Summit. Show all posts
Showing posts with label Tax Summit. Show all posts
Sunday, November 1, 2009
Did we really need a summit to figure out how to fix budget?
Nashua Telegraph columnist John Bachman questions why House leadership would hold a Tax Summit, but not give equal attention to state spending.
Saturday, October 24, 2009
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.
Friday, October 23, 2009
A Spending Summit: Let's Have One
The Union Leader argues now that the Ways and Means Committee has held a two day Tax Summit, it's time for legislative leaders to put the same attention into spending.
We were happy to see that so many competing points of view were presented at this week's tax hearing. We'd be surprised if any Ways and Means Committee member had his or her view changed, but at least there was a wide-ranging discussion of how the state's revenue structure works and how the state would change if its tax base changed.
Legislators would benefit from a similar, but not identical, hearing on spending. The thoughts of analysts and economists are useful. And we might be able to learn a thing or two from the experiences of other states. But given the economic reality facing the state -- revenue declines with no end in sight -- the most useful presentations might come from administrators and other employees tasked with finding better ways to spend what money we have.
Charlie Arlinghaus talks taxes on Bulldog Live
Josiah Bartlett Center President Charlie Arlinghaus will join Bulldog Brian Tilton this afternoon at 1:05pm to talk about the recent Tax Summit.
Tune into "Bulldog Live" on 107.7 WTPL, or listen live at WTPLFM.com
Tune into "Bulldog Live" on 107.7 WTPL, or listen live at WTPLFM.com
No quick-fix on state tax issues
Tom Fahey wraps up two days of Tax Summit with a story in the Union Leader, in which he turns to a certain think tank for a little history on tax reform in New Hampshire.
Josiah Bartlett Center on Public Policy president Charles Arlinghaus said it's been more like 40 years since the last real tear-down of state tax code. The work in 1970 produced the business profits tax, now a mainstay of state revenues. He said the BPT "created a sea change" by shifting state tax policy to encourage business investment, and set the stage for an economic boom that lasted through the 1990s.
Arlinghaus said he takes issue with the conservative Tax Foundation's rankings that put New Hampshire at the bottom of the heap in terms of business taxes. He said the foundation, in its rankings, doesn't count a key business enterprise tax credit that companies can take.
Thursday, October 22, 2009
Live Blogging the Tax Summit- Final Thoughts
The House Ways and Means Committee has concluded its two day State Revenue Information Session. We've posted extensive summaries of each panel and speaker, as well as links to their documents and audio of all eight panels.
We've covered this event without editorial comment in order to provide both real-time insight into the proceedings and an independent public record of the Tax Summit. Now that it's over, I'd like to share a few thoughts on the two days of tax policy discussion that just concluded.
Summarizing the event, it was an extensive look at New Hampshire's revenue structure. While the Ways and Means Committee is limited in dealing only with taxes and fees, discussing state revenues without addressing spending can only take you so far.
Ways and Means Committee Chair Susan Almy was criticized for inviting a liberal tax group, ITEP, which is already on record in support of an income tax for New Hampshire. However, the that panel also featured two right-leaning think tanks with much more conservative perspetives.
The first day of the Tax Summit was dominated by economists, of several persuasions. Given that these panelists were working from the same data, they did duplicate each other somewhat, emphasizing that New Hampshire is more highly reliant on property taxes for state and local spending, has an overall low tax burden, and has increased its business taxes significantly.
Later panels took a more hands-on approach to New Hampshire taxes, bringing in the experiences of New Hampshire businesses both large and small. Particularly telling was Andy Sanborn long list of every tax he pays to keep his restaurant open.
The only panel without appreciable balance was Thursday's 10:30 panel featuring Brad Cook, Larry Kelly, and Laurel Redden. All three hammered the property tax, and called for a tax system based more on an ability to pay. Taken by itself, this panel showed a heavy pro-income tax bias that critics had feared when Almy announced her intentions last month. Taken as one of eight panels across two days, the Committee did receive a balanced and extensive stream of information from a variety of perspectives.
The only obvious ommission from the Tax Summit was an invitation to any of New Hampshire's many active taxpayers groups. A representative from the Coalition of New Hampshire Taxpayers, Granite State Taxpayers, or the New Hampshire Advantage Coalition would have both provided needed balance to the Granite State Fair Tax Coalition, and helped address criticism of Almy and House Speaker Terie Norelli, both long-time income tax supporters. Failure to include the voice of a single taxpayer group unnecessarily fueled distrust that Almy and Norelli were simply using the Tax Summit to generate ammunition for their preferred solution, an income tax.
After two days of discussion, and spotty media coverage outside of NH Watchdog, the Tax Summit is unlikely to change many minds on tax policy. Supporters and opponents of broad based taxes heard enough to bolster their current opinions. Hopefully, members of the House and Senate Ways and Means Committee took away the need to make tax policy in a more open and transparent fashion, to resist the urge to pick winners and losers through the tax code, and to evaluate taxes on their ability to raise revenues with the least disruption to the New Hampshire economy.
Next week, the House Republican Caucus will hold a "Stop the Spending" summit in Concord. This event will address some of the important questions not addressed at this week's Tax Summit. We encourage more high profile discussions of public policy. We believe that open and robust debate leads to better policy decisions, and that bad ideas deserve to be evaluated alongside good ones.
We've covered this event without editorial comment in order to provide both real-time insight into the proceedings and an independent public record of the Tax Summit. Now that it's over, I'd like to share a few thoughts on the two days of tax policy discussion that just concluded.
Summarizing the event, it was an extensive look at New Hampshire's revenue structure. While the Ways and Means Committee is limited in dealing only with taxes and fees, discussing state revenues without addressing spending can only take you so far.
Ways and Means Committee Chair Susan Almy was criticized for inviting a liberal tax group, ITEP, which is already on record in support of an income tax for New Hampshire. However, the that panel also featured two right-leaning think tanks with much more conservative perspetives.
The first day of the Tax Summit was dominated by economists, of several persuasions. Given that these panelists were working from the same data, they did duplicate each other somewhat, emphasizing that New Hampshire is more highly reliant on property taxes for state and local spending, has an overall low tax burden, and has increased its business taxes significantly.
Later panels took a more hands-on approach to New Hampshire taxes, bringing in the experiences of New Hampshire businesses both large and small. Particularly telling was Andy Sanborn long list of every tax he pays to keep his restaurant open.
The only panel without appreciable balance was Thursday's 10:30 panel featuring Brad Cook, Larry Kelly, and Laurel Redden. All three hammered the property tax, and called for a tax system based more on an ability to pay. Taken by itself, this panel showed a heavy pro-income tax bias that critics had feared when Almy announced her intentions last month. Taken as one of eight panels across two days, the Committee did receive a balanced and extensive stream of information from a variety of perspectives.
The only obvious ommission from the Tax Summit was an invitation to any of New Hampshire's many active taxpayers groups. A representative from the Coalition of New Hampshire Taxpayers, Granite State Taxpayers, or the New Hampshire Advantage Coalition would have both provided needed balance to the Granite State Fair Tax Coalition, and helped address criticism of Almy and House Speaker Terie Norelli, both long-time income tax supporters. Failure to include the voice of a single taxpayer group unnecessarily fueled distrust that Almy and Norelli were simply using the Tax Summit to generate ammunition for their preferred solution, an income tax.
After two days of discussion, and spotty media coverage outside of NH Watchdog, the Tax Summit is unlikely to change many minds on tax policy. Supporters and opponents of broad based taxes heard enough to bolster their current opinions. Hopefully, members of the House and Senate Ways and Means Committee took away the need to make tax policy in a more open and transparent fashion, to resist the urge to pick winners and losers through the tax code, and to evaluate taxes on their ability to raise revenues with the least disruption to the New Hampshire economy.
Next week, the House Republican Caucus will hold a "Stop the Spending" summit in Concord. This event will address some of the important questions not addressed at this week's Tax Summit. We encourage more high profile discussions of public policy. We believe that open and robust debate leads to better policy decisions, and that bad ideas deserve to be evaluated alongside good ones.
Live Blogging the Tax Summit- Recap
Joe Magruder- former New England news editor for the Associated Press.
Magruber is recapping the large amount of information heard by the Committee over the past two days.
He says that that the sheer volume of information conveyed shows that the event was a success. He says that the Committee asked all the speakers to keep the focus on revenues, and Magruber says that it happened, though the Committee also heard from many speakers on the related issue of spending.
He hopes that there will be equal enthusiasm for a comprehensive look at how the state spends money over the next biennium. He says as tough as it has been to debate income taxes, he can't wait until someone tries to get rid of local fire departments and school boards.
Multiple speakers reminded the Committee of the 1992 KPMG study concluding that New Hampshire has a structural deficit, where given spending trends outpace the growth of revenues. He mentions that Charlie Arlinghaus argues taxes have grown over the years faster than Gross State Product, while an earlier speaker took the opposite view.
Magruber says some applaud the structural deficit because it forces the Legislature to take a close look at the budget every two years. He says General Fund revenues have fallen significantly as a segment of the total state budget.
Magruber predicts that while the recent budget debate was tough, the next budget is shaping up as even tighter. He asks if the current economic downturn is a temporary crisis, or if New Hampshire is facing a long-term need to restructure its finances.
Magruber was struck by the depth of concern over the state's ability to generate jobs when it comes out of recession, which may not be for 6-12 months. He says some potential vulnerabilities in the New Hampshire economy predate the recession, and may be masked by the current climate. He recalled Russ thibeault's concern that lower job growth may be "the new normal" for New Hampshire.
Magruber says that troubling demographic trends on migration and aging show New Hampshire's economy is changing, which will make future revenues scarce, and fiercer competition among states for high-tech jobs.
He says that the ultimate goal of economic development, through tax policy and other means, should be attracting highly educated and talented employees and the companies that hire them. New Hampshire has traditionally this through low taxes, a high quality of life, and being business friendly. He pointed out that New Hampshire doesn't have low property or business taxes, but still has a low tax burden overall.
He says panelists largely agreed that New Hampshire's tax system should be simple, competitive, transparent, adequate to cover spending needs, and fair. Getting to those goals will always be a source of disagreement, for the Legislature to decide.
Magruber promises to draft amore extensive written report over the next two weeks.
The House Ways and Means Committee is posting audio of the entire session, as well as any documents handed out by the speakers on its website.
Magruber is recapping the large amount of information heard by the Committee over the past two days.
He says that that the sheer volume of information conveyed shows that the event was a success. He says that the Committee asked all the speakers to keep the focus on revenues, and Magruber says that it happened, though the Committee also heard from many speakers on the related issue of spending.
He hopes that there will be equal enthusiasm for a comprehensive look at how the state spends money over the next biennium. He says as tough as it has been to debate income taxes, he can't wait until someone tries to get rid of local fire departments and school boards.
Multiple speakers reminded the Committee of the 1992 KPMG study concluding that New Hampshire has a structural deficit, where given spending trends outpace the growth of revenues. He mentions that Charlie Arlinghaus argues taxes have grown over the years faster than Gross State Product, while an earlier speaker took the opposite view.
Magruber says some applaud the structural deficit because it forces the Legislature to take a close look at the budget every two years. He says General Fund revenues have fallen significantly as a segment of the total state budget.
Magruber predicts that while the recent budget debate was tough, the next budget is shaping up as even tighter. He asks if the current economic downturn is a temporary crisis, or if New Hampshire is facing a long-term need to restructure its finances.
Magruber was struck by the depth of concern over the state's ability to generate jobs when it comes out of recession, which may not be for 6-12 months. He says some potential vulnerabilities in the New Hampshire economy predate the recession, and may be masked by the current climate. He recalled Russ thibeault's concern that lower job growth may be "the new normal" for New Hampshire.
Magruber says that troubling demographic trends on migration and aging show New Hampshire's economy is changing, which will make future revenues scarce, and fiercer competition among states for high-tech jobs.
He says that the ultimate goal of economic development, through tax policy and other means, should be attracting highly educated and talented employees and the companies that hire them. New Hampshire has traditionally this through low taxes, a high quality of life, and being business friendly. He pointed out that New Hampshire doesn't have low property or business taxes, but still has a low tax burden overall.
He says panelists largely agreed that New Hampshire's tax system should be simple, competitive, transparent, adequate to cover spending needs, and fair. Getting to those goals will always be a source of disagreement, for the Legislature to decide.
Magruber promises to draft amore extensive written report over the next two weeks.
The House Ways and Means Committee is posting audio of the entire session, as well as any documents handed out by the speakers on its website.
Live Blogging the Tax Summit- Richard Ober
Richard Ober- New Hampshire Charitable Foundation
Ober says the move to implement "Current Use" was a sensible tax reform that assessed property taxes on what a property was, and not on what it could be. He says its the most important environmental tax reform of the last 50 years.
As New Hampshire's largest private charitable foundation and largest private source of scholarships, he says the Foundation made $33 million in grants last year. He says the Foundation's funding decisions are a microcosm of the Legislature's budget decisions.
Ober calls the non-profit sector the third sector of the New Hampshire economy, covering one in eight New Hampshire workers and almost 15% of the Gross State Product. He says business for non-profits is booming, but revenues are not.
He argues that non-profits handle many services in New Hampshire that are covered by state and local governments elsewhere. He says that means Granite Staters are more engaged in non-profits than other states, but should not be taken to an extreme.
Ober says when the state cuts services, demand for social services shifts to cities and town, to non-profit organizations, and to the future when they will cost much more. He says this year's Town Meetings were a tough environment for the local safety net. He says non-profits are also being asked to take up more and more demand, including significant increases in applications from state agencies looking for assistance, efforts to start new non-profits to meet gaps in state services, and increased demand caused by the recession.
He argues the Legislature needs to look at economic and demographic trends to address future needs as well as current demand. He says spending now to address substance abuse or energy efficiency saves much more money later. "Spend a little now. Save a lot later."
He says the fiscally prudent thing to do it structure a tax policy that looks ahead and encourages New Hampshire. He says New Hampshire need to address its tax policy is order to retain high-tech companies and keeps it econommic edge.
Ober says three principles are adequecy of state revenues to meet the state's needs, equity and fairness of the tax policy, and competitiveness and stability of the tax structure.
Ober says that the Committee should receive more information and more perspectives on long-term problems, especially when it is not under the pressure of the Legislative Session and a deadline to have an answer tomorrow.
Ober says the move to implement "Current Use" was a sensible tax reform that assessed property taxes on what a property was, and not on what it could be. He says its the most important environmental tax reform of the last 50 years.
As New Hampshire's largest private charitable foundation and largest private source of scholarships, he says the Foundation made $33 million in grants last year. He says the Foundation's funding decisions are a microcosm of the Legislature's budget decisions.
Ober calls the non-profit sector the third sector of the New Hampshire economy, covering one in eight New Hampshire workers and almost 15% of the Gross State Product. He says business for non-profits is booming, but revenues are not.
He argues that non-profits handle many services in New Hampshire that are covered by state and local governments elsewhere. He says that means Granite Staters are more engaged in non-profits than other states, but should not be taken to an extreme.
Ober says when the state cuts services, demand for social services shifts to cities and town, to non-profit organizations, and to the future when they will cost much more. He says this year's Town Meetings were a tough environment for the local safety net. He says non-profits are also being asked to take up more and more demand, including significant increases in applications from state agencies looking for assistance, efforts to start new non-profits to meet gaps in state services, and increased demand caused by the recession.
He argues the Legislature needs to look at economic and demographic trends to address future needs as well as current demand. He says spending now to address substance abuse or energy efficiency saves much more money later. "Spend a little now. Save a lot later."
He says the fiscally prudent thing to do it structure a tax policy that looks ahead and encourages New Hampshire. He says New Hampshire need to address its tax policy is order to retain high-tech companies and keeps it econommic edge.
Ober says three principles are adequecy of state revenues to meet the state's needs, equity and fairness of the tax policy, and competitiveness and stability of the tax structure.
Ober says that the Committee should receive more information and more perspectives on long-term problems, especially when it is not under the pressure of the Legislative Session and a deadline to have an answer tomorrow.
Live Blogging the Tax Summit- Charlie Arlinghaus
Charlie Arlinghaus- Union Leader columnist and President of the Josiah Bartlett Center for Public Policy.
Arlinghaus started by saying that taxes have grown faster than the New Hampshire economy over the past 20 years. Since 1988, inflation has totaled 85%, the Gross State Product has increased 163%, but total taxes have increased 336%
"Unrestricted revenues"are just 45% of the total budget, 35% are federal funds, and 25% are dedicated funds.
Arlinghaus gave some background on the last two major tax reforms in New Hampshire, the Business Profits Tax in 1970 and the Business Enterprise Tax in 1993.
Before 1970, New Hampshire based its local and state taxes largely on capital, which resulted in a ring of warehouses around New Hampshire and a barrier to investment in the Granite State.
The Business Profits Tax replaced 13 different taxes on capital, stock, and investment, and returned a large portion of the revenue to towns to replace the local taxes it eliminated. Arlinghaus argues that this change from taxing capital to profits dramatically changed the New Hampshire economy, and made it the engine of economic development in New England.
In 1993, Governor Steve Merrill wanted to lower the rate of the Business Profits Tax, which has increased to 8%. Since it only applied to profits, 1% of New Hampshire businesses paid 70% of the tax. Additionally, there were numerous credits and exceptions which complicated enforcement and transparency, and allowed the Legislature to pick winners and losers.
The implementation of the Business Enterprise Tax was designed to be revenue neutral, reducing the BPT from 8% to 7%, increasing the exemption level while cutting special exceptions, repealing the Savings Bank Tax and Corporate Franchise Tax, and setting the BET at just 0.25% Additionally, the BET was credited against the BPT, ensuring that businesses would not be double-taxed.
Arlinghaus stresses that if the Legislature wants to reform taxes, it must have trust that it is changing the tax structure and not merely trying to raise more money. The Legislature needs to be completely transparent when it goes about it. He says any move to increase taxes should be separated from changes to the tax code, so that each question can be debated on its own merits.
He says lacks of trust and transparency doomed Governor Shaheen's call for a Sales Tax. And it was lacking when the Legislature imposed a new tax on Limited Liability Corporations (LLC's) at the last minute in the Committee of Conference.
Arlinghaus says the biggest consideration in tax policy is jobs. New Hampshire also needs revenue to fund programs, but that taxes can not harm New Hampshire's competitive advantage. He argues that now that capital is free, no company has to locate or remain in New Hampshire. He says the Legislature can not be tempted to pick winners and losers through the tax system, and should never raise taxes simply because it can. He cites cigarette tax hikes as an example of a regressive tax that keeps passing.
Arlinghaus started by saying that taxes have grown faster than the New Hampshire economy over the past 20 years. Since 1988, inflation has totaled 85%, the Gross State Product has increased 163%, but total taxes have increased 336%
"Unrestricted revenues"are just 45% of the total budget, 35% are federal funds, and 25% are dedicated funds.
Arlinghaus gave some background on the last two major tax reforms in New Hampshire, the Business Profits Tax in 1970 and the Business Enterprise Tax in 1993.
Before 1970, New Hampshire based its local and state taxes largely on capital, which resulted in a ring of warehouses around New Hampshire and a barrier to investment in the Granite State.
The Business Profits Tax replaced 13 different taxes on capital, stock, and investment, and returned a large portion of the revenue to towns to replace the local taxes it eliminated. Arlinghaus argues that this change from taxing capital to profits dramatically changed the New Hampshire economy, and made it the engine of economic development in New England.
In 1993, Governor Steve Merrill wanted to lower the rate of the Business Profits Tax, which has increased to 8%. Since it only applied to profits, 1% of New Hampshire businesses paid 70% of the tax. Additionally, there were numerous credits and exceptions which complicated enforcement and transparency, and allowed the Legislature to pick winners and losers.
The implementation of the Business Enterprise Tax was designed to be revenue neutral, reducing the BPT from 8% to 7%, increasing the exemption level while cutting special exceptions, repealing the Savings Bank Tax and Corporate Franchise Tax, and setting the BET at just 0.25% Additionally, the BET was credited against the BPT, ensuring that businesses would not be double-taxed.
Arlinghaus stresses that if the Legislature wants to reform taxes, it must have trust that it is changing the tax structure and not merely trying to raise more money. The Legislature needs to be completely transparent when it goes about it. He says any move to increase taxes should be separated from changes to the tax code, so that each question can be debated on its own merits.
He says lacks of trust and transparency doomed Governor Shaheen's call for a Sales Tax. And it was lacking when the Legislature imposed a new tax on Limited Liability Corporations (LLC's) at the last minute in the Committee of Conference.
Arlinghaus says the biggest consideration in tax policy is jobs. New Hampshire also needs revenue to fund programs, but that taxes can not harm New Hampshire's competitive advantage. He argues that now that capital is free, no company has to locate or remain in New Hampshire. He says the Legislature can not be tempted to pick winners and losers through the tax system, and should never raise taxes simply because it can. He cites cigarette tax hikes as an example of a regressive tax that keeps passing.
Live Blogging the Tax Summit- Morning Session Audio
The House Ways and Means Committee has posted audio from this morning's panels.
10-22-2009 AM Session Audio Part 1
10-22-2009 AM Session Audio Part 2
The Committee has also posted a new page with all the materials from the State Revenue Information Session.
10-22-2009 AM Session Audio Part 1
10-22-2009 AM Session Audio Part 2
The Committee has also posted a new page with all the materials from the State Revenue Information Session.
Live Blogging the Tax Summit- Community Perspectives II
Charlie Arlinghaus- columnist for the Union Leader and President of the Josiah Bartlett Center for Public Policy.
Richard Ober- Vice President for Community Outreach and Communication, New Hampshire Charitable Foundation
Richard Ober- Vice President for Community Outreach and Communication, New Hampshire Charitable Foundation
Live Blogging the Tax Summit- Laurel Redden
Laural Redden- Vice President of Board of Directors, Granite State Fair Tax Coalition
Redden argues that the current revenue system for New Hampshire is unfair, unjust, and inadequate. She says that becomes apparent when the system is exposed to public debate.
She reports that 114 towns have voted on warrant articles against the current tax structure and "The Pledge" to veto broad based taxes. 83 towns approved the warrant, or 73%.
She provided a handout of a slide show arguing that New Hampshire needs to adopt a tax structure that accounts for an individual's or business's ability to pay, lowers property taxes for low income taxpayers, diversifies New Hampshire's revenue portfolio, expands the tax base, and offers simple administration and accountability.
Redden says the Coalition has not proposed, endorsed, or opposed alternatives to the property tax. She also says her group does not discuss state or local expenditures, only revenues.
She says the property tax is a broad based tax, but it ignores your ability to pay. She says the average New Hampshire family pays 5.8% of its income in property taxes, and that the problem can not be addressed through spending cuts or heavy handed caps on spending.
The Coalition has developed a series of questions as a "lens" through which to view whether a given tax is a good idea.
The "lens" asks who primarily pays each tax, and if it's related to their ability to pay. She also wants to know whether exceptions are made for those least able to afford it, and if those with higher incomes pay their fair share.
If a tax is used to fund a specific service, has revenue kept pace with demand for that service? Does the tax place businesses at a competitive disadvantage compared to other states? Are adverse impacts easily identifiable?
She also asks if a tax encourages businesses to make decisions based on economic advantages and not on tax savings, if out of states pay their fair share, and if there is a Federal offset to the tax.
Redden also calls for simplicity, transparency, and accountability in tax policy.
Redden presented a series of charts that the Coalition uses to highlights its opposition to New Hampshire's current tax system, including its reliance on property taxes to pay for local and state government, and a study which shows that the wealthiest residents pay a smaller percentage of their income in taxes.
Redden argues that the current revenue system for New Hampshire is unfair, unjust, and inadequate. She says that becomes apparent when the system is exposed to public debate.
She reports that 114 towns have voted on warrant articles against the current tax structure and "The Pledge" to veto broad based taxes. 83 towns approved the warrant, or 73%.
She provided a handout of a slide show arguing that New Hampshire needs to adopt a tax structure that accounts for an individual's or business's ability to pay, lowers property taxes for low income taxpayers, diversifies New Hampshire's revenue portfolio, expands the tax base, and offers simple administration and accountability.
Redden says the Coalition has not proposed, endorsed, or opposed alternatives to the property tax. She also says her group does not discuss state or local expenditures, only revenues.
She says the property tax is a broad based tax, but it ignores your ability to pay. She says the average New Hampshire family pays 5.8% of its income in property taxes, and that the problem can not be addressed through spending cuts or heavy handed caps on spending.
The Coalition has developed a series of questions as a "lens" through which to view whether a given tax is a good idea.
The "lens" asks who primarily pays each tax, and if it's related to their ability to pay. She also wants to know whether exceptions are made for those least able to afford it, and if those with higher incomes pay their fair share.
If a tax is used to fund a specific service, has revenue kept pace with demand for that service? Does the tax place businesses at a competitive disadvantage compared to other states? Are adverse impacts easily identifiable?
She also asks if a tax encourages businesses to make decisions based on economic advantages and not on tax savings, if out of states pay their fair share, and if there is a Federal offset to the tax.
Redden also calls for simplicity, transparency, and accountability in tax policy.
Redden presented a series of charts that the Coalition uses to highlights its opposition to New Hampshire's current tax system, including its reliance on property taxes to pay for local and state government, and a study which shows that the wealthiest residents pay a smaller percentage of their income in taxes.
Live Blogging the Tax Summit- Larry Kelly
Larry Kelly- Tri-County Community Action Program (CAP)
Kelly says there are lots of taxes in New Hampshire. He says there is a large, and frequently unrelated, reservoir of revenue sources, as well as continued discussion of new taxes, such as a sales tax, income tax, or energy tax.
Kelly says he will concentrate on fairness and utility of current taxes. He says property tax is not fair. He says its has outlived its usefulness as the major revenue source in New Hampshire. He says the property tax is unfair among communities with different amounts of property wealth, and unfair to lower, middle, and fixed income individuals. He says it does not account for accidents that can reduce a family's income, but not their tax burden.
He argues current reliance on property taxes should be changed, and major adjustments should be considered. Kelly says if a sales tax is considered, the Legislature should exempt essentials such as food, clothing, and housing necessities.
If an income tax is considered, which he says is a lot fairer than a property tax, it needs to be progressive. (Progressive tax rates are not allowed under New Hampshire's Constitution.) If environmental taxes are considered, it should reduce pollution and dependence on obsolescent fuels.
Kelly says "sin taxes" on cigarettes, alcohol, and gambling help deter undesired behavior. He would dedicate the revenue from alcohol taxes to mitigating the revenue from the harm alcohol causes.
Kelly says there are lots of taxes in New Hampshire. He says there is a large, and frequently unrelated, reservoir of revenue sources, as well as continued discussion of new taxes, such as a sales tax, income tax, or energy tax.
Kelly says he will concentrate on fairness and utility of current taxes. He says property tax is not fair. He says its has outlived its usefulness as the major revenue source in New Hampshire. He says the property tax is unfair among communities with different amounts of property wealth, and unfair to lower, middle, and fixed income individuals. He says it does not account for accidents that can reduce a family's income, but not their tax burden.
He argues current reliance on property taxes should be changed, and major adjustments should be considered. Kelly says if a sales tax is considered, the Legislature should exempt essentials such as food, clothing, and housing necessities.
If an income tax is considered, which he says is a lot fairer than a property tax, it needs to be progressive. (Progressive tax rates are not allowed under New Hampshire's Constitution.) If environmental taxes are considered, it should reduce pollution and dependence on obsolescent fuels.
Kelly says "sin taxes" on cigarettes, alcohol, and gambling help deter undesired behavior. He would dedicate the revenue from alcohol taxes to mitigating the revenue from the harm alcohol causes.
Live Blogging the Tax Summit- Brad Cook
Brad Cook- Columnist, NH Business Review
Cook says that the first thing to do is examine how we are spending the people's money. He says there are a number of budgeting fallacies, such as "zero based budgeting", as if we could eliminate all programs and go back to the base. He suggests that using "sunset laws" is better, since it would force government to periodically review every program to see if some have outlasted their usefullness.
He next suggests examining whether there are government functions that could be better fulfilled by the private economy. If so, he says they should be privatized, and says that Cannon Mountain should be producing instead of sapping revenue.
After government has determined the minimum spending required, only then should it give attention to revenue. He poses four tests for any tax:
1. What revenue sources are fair and do not disproportionately disadvantage those unable to pay?
2. What is the nature of the New Hampshire economy, and which taxes fit that economy best?
3. Businesses create jobs which support us all. New Hampshire has become less business friendly, and if this continues, our economy and tax base will suffer.
4. Like the Hypocratic Oath to "do no harm", avoid gambling, which will negatively affect our most vulnerable people and be an unrealiable means of raising revenue. Do not put faith in "sin taxes" that question our morality while they defy economics.
Cook says that the first thing to do is examine how we are spending the people's money. He says there are a number of budgeting fallacies, such as "zero based budgeting", as if we could eliminate all programs and go back to the base. He suggests that using "sunset laws" is better, since it would force government to periodically review every program to see if some have outlasted their usefullness.
He next suggests examining whether there are government functions that could be better fulfilled by the private economy. If so, he says they should be privatized, and says that Cannon Mountain should be producing instead of sapping revenue.
After government has determined the minimum spending required, only then should it give attention to revenue. He poses four tests for any tax:
1. What revenue sources are fair and do not disproportionately disadvantage those unable to pay?
2. What is the nature of the New Hampshire economy, and which taxes fit that economy best?
3. Businesses create jobs which support us all. New Hampshire has become less business friendly, and if this continues, our economy and tax base will suffer.
4. Like the Hypocratic Oath to "do no harm", avoid gambling, which will negatively affect our most vulnerable people and be an unrealiable means of raising revenue. Do not put faith in "sin taxes" that question our morality while they defy economics.
Live Blogging the Tax Summit- Community Perspectives
Brad Cook- columnist for NH Business Review
Larry Kelly- Tri-County Community Action Program
Laurel Redden- Granite State Fair Tax Coalition
Larry Kelly- Tri-County Community Action Program
Laurel Redden- Granite State Fair Tax Coalition
Live Blogging the Tax Summit- Afternoon Session Audio
The House Ways and Means Committee has posted audio from yesterday afternoon's two panels.
Revenue Information Session 10-21-2009 PM Part I
Revenue Information Session 10-21-2009 PM Part II
Revenue Information Session 10-21-2009 PM Part I
Revenue Information Session 10-21-2009 PM Part II
Live Blogging the Tax Summit- Alex Ray
Alex Ray- Owner, the Common Man restaurants.
Ray says that growing up in New Jersey, he always looked forward to visiting New Hampshire, and now he wants to protect those values.
He says the hospitality industry caters not only to out of state visitors, but also to people living here. He says New Hampshire has to protect its assets, like its lakes, seacoast, as well as its lifestyle and environment.
Ray also says minimal gambling is an asset that needs to be protected. He says when we go down the road of taxation, the first priority should be protecting what we have.
Ray says leaning towards an income tax is scary because of the loopholes, which mean the top and bottom are subsidized by the middle. And he says a sales tax would be more regressive than we can calculate, since it would discourage people from coming to New Hampshire. He says done right, an income tax would be the fairest way to go.
On property taxes, Ray says they aren't so bad, but they are inequitable. He says taxing property may providing an incentive to not improve their property. He says business taxes aren't that bad, as long as they are kept in check.
He says New Hampshire is held in the highest esteem by those who live here, and those who visit. He warns the Committee "don't sell our soul to fund ourselves."
Ray says that growing up in New Jersey, he always looked forward to visiting New Hampshire, and now he wants to protect those values.
He says the hospitality industry caters not only to out of state visitors, but also to people living here. He says New Hampshire has to protect its assets, like its lakes, seacoast, as well as its lifestyle and environment.
Ray also says minimal gambling is an asset that needs to be protected. He says when we go down the road of taxation, the first priority should be protecting what we have.
Ray says leaning towards an income tax is scary because of the loopholes, which mean the top and bottom are subsidized by the middle. And he says a sales tax would be more regressive than we can calculate, since it would discourage people from coming to New Hampshire. He says done right, an income tax would be the fairest way to go.
On property taxes, Ray says they aren't so bad, but they are inequitable. He says taxing property may providing an incentive to not improve their property. He says business taxes aren't that bad, as long as they are kept in check.
He says New Hampshire is held in the highest esteem by those who live here, and those who visit. He warns the Committee "don't sell our soul to fund ourselves."
Live Blogging the Tax Summit- Andy Sanborn
Andy Sanborn- Owner, The Draft Bar and Grill, Concord, on behalf of the New Hampshire Restaurant and Lodging Association.
He says the New Hampshire lodging and restaurant industry is the largest taxpayer in New Hampshire, with 12,000 outlets, 67,000 employees, and pay $210 million in Rooms and Meals tax in addition to all the other business taxes.
Sanborn says few people know the total taxes they pay. He listed all the taxes that his business pays. He says a restaurant with $1 million in business pays the BET, BPT, gas tax, beer tax, vehicle registration, liquor license, liquor training, insurance taxes, property taxes, FICA, and dozens more. He says that totals $164,000 in business taxes, before he pays any personal taxes. He says the tax burden represents 16% of the company's revenue, ranking third among his expenses behind the cost of food and paying his employees.
Sanborn also list the 37 taxes paid by gravel pits, as another example of hidden taxes not known to most New Hampshire residents. He says taxes are this business's fourth highest expense.
Sanborn adds that regulatory taxes also burden businesses, including annual testing for dust in the air at the gravel pit. He says over the last seven years, the gravel pits he's approached have always paid the minimum assessment of $46.10.
He argues that businesses can only pay so much in taxes before they have to pass along those expenses to customers. He says that threatens their ability to pay for health insurance and pay raises, and ultimately comes from those living in and visiting the state.
He acknowledges the role of businesses to contribute to the state through taxation, but says the current level of taxation has become unreasonable. He says if the State of New Hampshire operated like a business, it would have to pay $1.9 billion in taxes. And he points out that the Legislature is currently fighting over $110 million in the JUA Lawsuit.
He says lawmakers should spend as much time on making sure government is operating efficiently as in raising revenue. He says every business has to look at expenses, and so should government. He says legislators, especially those who want more revenue, should realizes that businesses have reached the maximum level that they can be taxed.
He says the biggest fear isn't unemployment, but the larger number who are underemployed. He says the state is losing out because these people can't participate in the economy as much as they want to.
"We believe that you should help business expand, and that expansion will result in more tax revenue under the existing structure."
He says when a company moves out of state, or consolidates into another state, New Hampshire loses those jobs and tax revenues forever. Sanborn points to the example of Des Moines, Iowa providing tax incentives to Hollywood as a way to attract jobs.
He says that as a tourism state, New Hampshire has the opportunity to attract visitors, even though it has raised it Rooms and Meal Tax and now charges people to sleep on the ground.
He says the New Hampshire lodging and restaurant industry is the largest taxpayer in New Hampshire, with 12,000 outlets, 67,000 employees, and pay $210 million in Rooms and Meals tax in addition to all the other business taxes.
Sanborn says few people know the total taxes they pay. He listed all the taxes that his business pays. He says a restaurant with $1 million in business pays the BET, BPT, gas tax, beer tax, vehicle registration, liquor license, liquor training, insurance taxes, property taxes, FICA, and dozens more. He says that totals $164,000 in business taxes, before he pays any personal taxes. He says the tax burden represents 16% of the company's revenue, ranking third among his expenses behind the cost of food and paying his employees.
Sanborn also list the 37 taxes paid by gravel pits, as another example of hidden taxes not known to most New Hampshire residents. He says taxes are this business's fourth highest expense.
Sanborn adds that regulatory taxes also burden businesses, including annual testing for dust in the air at the gravel pit. He says over the last seven years, the gravel pits he's approached have always paid the minimum assessment of $46.10.
He argues that businesses can only pay so much in taxes before they have to pass along those expenses to customers. He says that threatens their ability to pay for health insurance and pay raises, and ultimately comes from those living in and visiting the state.
He acknowledges the role of businesses to contribute to the state through taxation, but says the current level of taxation has become unreasonable. He says if the State of New Hampshire operated like a business, it would have to pay $1.9 billion in taxes. And he points out that the Legislature is currently fighting over $110 million in the JUA Lawsuit.
He says lawmakers should spend as much time on making sure government is operating efficiently as in raising revenue. He says every business has to look at expenses, and so should government. He says legislators, especially those who want more revenue, should realizes that businesses have reached the maximum level that they can be taxed.
He says the biggest fear isn't unemployment, but the larger number who are underemployed. He says the state is losing out because these people can't participate in the economy as much as they want to.
"We believe that you should help business expand, and that expansion will result in more tax revenue under the existing structure."
He says when a company moves out of state, or consolidates into another state, New Hampshire loses those jobs and tax revenues forever. Sanborn points to the example of Des Moines, Iowa providing tax incentives to Hollywood as a way to attract jobs.
He says that as a tourism state, New Hampshire has the opportunity to attract visitors, even though it has raised it Rooms and Meal Tax and now charges people to sleep on the ground.
Live Blogging the Tax Summit- Guy Montminy
Guy Montminy- Electronic Solutions VP, Finance, BAE Systems
Montminy outlines BAE Systems eight facilities in New Hampshire, employing over 4,600 people. He says the company contributes over $600 million a year to the New Hampshire economy.
Montminy says his company seeks location that offers high quality employees, quality of life, low taxes, and honest government.
He says the threat of eliminating the BET credit against the BPT would have been disasterous to his company and the state's economy. He says forcing businesses to pay both taxes would result in lost jobs and lost revenue. He asks for support in maintaining a competitive tax structure.
Montminy outlines BAE Systems eight facilities in New Hampshire, employing over 4,600 people. He says the company contributes over $600 million a year to the New Hampshire economy.
Montminy says his company seeks location that offers high quality employees, quality of life, low taxes, and honest government.
He says the threat of eliminating the BET credit against the BPT would have been disasterous to his company and the state's economy. He says forcing businesses to pay both taxes would result in lost jobs and lost revenue. He asks for support in maintaining a competitive tax structure.
Live Blogging the Tax Summit- Gary Hirshberg
Gary Hirshberg- President, Owner, and CE-Yo of Stonyfield Farm Inc.
Hirshberg applauds the Committee for convening a seminar to focus on "how" the state raises money, rather than "how much" it raises. He says the state needs to look at real fundamentals.
He says "Shame on you" to anyone questioning the Committee for engaging "in a bipartisan and civil dialogue with citizens and business leaders on these issues."
Hirshberg adds, "Every thinking person in New Hampshire knows that our revenue model is broken, that we cannot meet basic needs, let alone address out declining infrastructures, and while we obviously cannot earily agree on a resolution or even a philosophy that would lead to an improved system, we will only get ther through a respectful and open-minded dialogue."
Hirshberg says that New Hampshire ranks just 22nd in when it's "Tax Freedom Day" lands, and that New Hampshire taxpayers have to work the first 100 days of the year just pay local, state, and federal taxes. He says the New Hampshire Advantage isn't a tax advantage, and that not everyone is always looking for the lowest cost.
He says the structural elements that are most vital are certainty, fairness, and rationality.
Certainty- Hirshberg says states can contribute to certainty by having clear, consistent, and stable business taxes.
Fairness- Hirshberg argues that New Hampshire should do more to tax incomes instead of taxing assets. He says when wealth was accurately measured by land, property taxes made sense.
Hirshberg says moving from a system that taxes property to one that incorporates an income tax would be a step in the right direction in terms of tax fairness.
He shared the results of a survey among his own employees, on how much each pays in property taxes, and how much those taxes have gone up over the past five years.
Hirshberg says politicians like to tax businesses versus individuals because businesses don't vote. But he says citizens need jobs, and greater business taxes can diminish their ability to hire more citizens.
He believes that just as individuals should be taxed on their income wealth, businesses should be too under the Business Profits Tax. He thinks its probably wise to include an exception for capital assets. And he says even unprofitable businesses should contribute, through the Business Enterprise Tax.
Rationality- Hirshberg says that basic economics teaches us that when you tax something, you get less of it. He wants to put this premise into action by taxing waste and pollution. He mentions "heat-trapping carbon emissions", which he says are both expensive and dangerous.
He says the RGGI states, including New Hampshire, have taken the first step to putting a price on carbon, and calls on New Hampshire to take a leadership role by further taxing carbon emissions. He points to carbon taxes in Finland, Sweden, Norway, and the Netherlands, as well as similar measures in Austria, Denmark, Italy, the UK, and parts of Canada.
Hirshberg says much of the Department of Environmental Services budget is already funded by emissions-based fees.
He says the "Third Industrial Revolution" will be about wher we get energy and how we use it. He says green markets are faring better than others in the current downturn, led by green buildings, energy efficiency, renewable energy, and cleaner transportation. He says clean technology has overtaken biotech and information technology among venture capitalists. He says New Hampshire could create 8,500 jobs by aggressively pursuing energy efficiency, and help bring down energy prices that are among the highest in the nation.
He says a BET-liek minimum assessment could be put on small businesses with low emissions, and suggests vehicle registration fees could be higher for gaz-guzzlers than gas-sippers.
Hirshberg concludes that the best way to grow the economy is to promote behaviors we like and discourage behavior we don't.
Hirshberg applauds the Committee for convening a seminar to focus on "how" the state raises money, rather than "how much" it raises. He says the state needs to look at real fundamentals.
He says "Shame on you" to anyone questioning the Committee for engaging "in a bipartisan and civil dialogue with citizens and business leaders on these issues."
Hirshberg adds, "Every thinking person in New Hampshire knows that our revenue model is broken, that we cannot meet basic needs, let alone address out declining infrastructures, and while we obviously cannot earily agree on a resolution or even a philosophy that would lead to an improved system, we will only get ther through a respectful and open-minded dialogue."
Hirshberg says that New Hampshire ranks just 22nd in when it's "Tax Freedom Day" lands, and that New Hampshire taxpayers have to work the first 100 days of the year just pay local, state, and federal taxes. He says the New Hampshire Advantage isn't a tax advantage, and that not everyone is always looking for the lowest cost.
He says the structural elements that are most vital are certainty, fairness, and rationality.
Certainty- Hirshberg says states can contribute to certainty by having clear, consistent, and stable business taxes.
Fairness- Hirshberg argues that New Hampshire should do more to tax incomes instead of taxing assets. He says when wealth was accurately measured by land, property taxes made sense.
Hirshberg says moving from a system that taxes property to one that incorporates an income tax would be a step in the right direction in terms of tax fairness.
He shared the results of a survey among his own employees, on how much each pays in property taxes, and how much those taxes have gone up over the past five years.
Hirshberg says politicians like to tax businesses versus individuals because businesses don't vote. But he says citizens need jobs, and greater business taxes can diminish their ability to hire more citizens.
He believes that just as individuals should be taxed on their income wealth, businesses should be too under the Business Profits Tax. He thinks its probably wise to include an exception for capital assets. And he says even unprofitable businesses should contribute, through the Business Enterprise Tax.
Rationality- Hirshberg says that basic economics teaches us that when you tax something, you get less of it. He wants to put this premise into action by taxing waste and pollution. He mentions "heat-trapping carbon emissions", which he says are both expensive and dangerous.
He says the RGGI states, including New Hampshire, have taken the first step to putting a price on carbon, and calls on New Hampshire to take a leadership role by further taxing carbon emissions. He points to carbon taxes in Finland, Sweden, Norway, and the Netherlands, as well as similar measures in Austria, Denmark, Italy, the UK, and parts of Canada.
Hirshberg says much of the Department of Environmental Services budget is already funded by emissions-based fees.
He says the "Third Industrial Revolution" will be about wher we get energy and how we use it. He says green markets are faring better than others in the current downturn, led by green buildings, energy efficiency, renewable energy, and cleaner transportation. He says clean technology has overtaken biotech and information technology among venture capitalists. He says New Hampshire could create 8,500 jobs by aggressively pursuing energy efficiency, and help bring down energy prices that are among the highest in the nation.
He says a BET-liek minimum assessment could be put on small businesses with low emissions, and suggests vehicle registration fees could be higher for gaz-guzzlers than gas-sippers.
Hirshberg concludes that the best way to grow the economy is to promote behaviors we like and discourage behavior we don't.
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