Voting with their feet

Our friend Earl Glynn of Kansas Watchdog reports on a local entreprenuer moving out of state to save on taxes. And he only had to move 100 feet.

Normally the opening of a new QuikTrip store is not a news item. But, tomorrow the QuikTrip Convenience Store at 27 Southwest Blvd will reopen in Kansas City, Missouri after ”moving” about 100 feet from Kansas to avoid higher taxes and more burdensome regulations in Kansas.

In late August the store closed its operation in Kansas and was torn down. The store was then rebuilt on the same site, but with the store, cash registers, and gasoline tanks on the Missouri side of the state line.

Charles M. Arlinghaus: Instead of whining, let's debate taxes

By CHARLES M. ARLINGHAUS

Today the political circus comes to town. As the House Ways and Means Committee begins two days of meetings about state tax policy, we may finally be able to put an end to the whining and screeching that passes for political debate in this country.

The Ways and Means Committee discusses taxes. Its name is the old British designation for revenues, taxes and fees -- the ways and means of funding the spending that government undertakes. As such, its mandate is to look at taxes, whether they are too high, whether they should be changed in some way.

Should the Ways and Means Committee discuss ways and means? Of course it should. Oddly, a number of conservatives in the state have been annoyed by this. They oppose an income tax, but rather than wanting an open debate about it, they object to any discussion of it. And if a discussion is to take place, they object to supporters of an income tax being on the agenda. This is nonsense.

First of all, the tax committee should discuss taxes. Second, if the committee invites presentations, those presentations should be from a broad spectrum. The committee sensibly invited three national groups. One is the left-wing Institute on Taxation and Economic Policy. ITEP has written that New Hampshire needs an income tax. The group is partially funded by liberal George Soros.

That a liberal billionaire funds liberal groups ought not to shock people. That the liberal presenter at a tax conference wants an income tax also is not news. The other two national groups on the same panel are the American Legislative Exchange Council, the organization of conservative state legislators, and the Tax Foundation, which is less ideological but whose work is constantly used by those of us on the right. One right, one left, one center.

The rest of the program is similarly balanced. Unfortunately, some conservative criticisms of this event sound either demagogic or nervous. They object to the left even being allowed to speak. They end up objecting to actually having a debate, which makes them seem embarrassed about their own positions.

I completely disagree with that approach. I don't want an income tax, and I'm happy to talk about it. Rather than objecting to anyone having a debate on the subject of income taxes, business taxes, excise taxes or anything else, we should look forward eagerly to an opportunity to explain our position.

You only object to the debate when you think you'll lose. I am confident in my positions and want the opportunity to explain them to a broader audience. I believe that I will persuade more people than not. Let's talk taxes. I think taxes are too high, and I want to talk about it. In July I wrote a report for the Josiah Bartlett Center titled "A Rising Tide of Taxes and Fees," and I want to talk about it. Often.

Silly criticism and whining by my conservative friends isn't the only problem with the debate. Our friend Joe McCarthy has reared his ugly head again. In an interview, Ways and Means Chairman Susan Almy accused her critics of "McCarthyism." When confronted about the silly criticism over ITEP speaking and where it gets its funding, Almy ended up calling her critics conspiracy theorists and discussing how Sen. Joe McCarthy's accusations ruined people's lives in the 1950s.

Until that point, she was right. She pointed out that almost every think tank or policy group survives on contributions from ideologically similar foundations or individuals, including the other organizations making presentations at today's hearing. She also asked rhetorically if the Legislature is only allowed to listen to the right, which was an accurate criticism of the most strident conservative critics. But then she joined those critics in silliness by dragging the McCarthy corpse out of its vault.

By and large, Rep. Almy deserves credit for organizing a good briefing for her committee. She's been up front about her own opinions about an income tax and about other taxes. More important, the list of speakers is largely balanced. You or I may not have picked the exact same people or scheduled two days worth of talking, but it is in general a good opportunity to make specific points about tax competitiveness, tax burdens and tax changes.

I think the Institute for Taxation and Economic Policy has the wrong idea for New Hampshire, but it has nothing to do with which foundations they apply to for grants. An income tax is a bad idea whether George Soros wants one or not. Let's have that debate, but let's leave George Soros and Joe McCarthy at home.

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

Let first-time home buyer credit expire

The Concord Monitor editorial page, never shy about advocating government intervention in the markets, comes out against extending the $8,000 first-time home buyer tax credit, which either goes to people who would buy homes anyway or pushed consumers into buying homes they otherwise couldn't afford.

That credit is slated to expire at the end of next month, and applications filed now may no longer grind through the mill fast enough to qualify. That's led the real estate industry and some members of Congress, most recently Rep. Carol Shea-Porter, to push to extend the credit for another six months or so. That would be a mistake.

The credit has helped to keep the housing market from sliding quite as far as it might otherwise have, but the money has largely gone to people who would have bought homes anyway because home prices have dropped so dramatically. Brookings Institution economist Ted Gayer estimates that 85 percent of the 1.9 million people who will receive the tax break would have purchased homes anyway.

Tax breaks for pets are a bad idea

Animals are great. Pets are great. Who doesn't love dogs? I've always been skeptical of cats, which would eat you if they were big enough. But pets are a wonderful and valuable thing. That doesn't mean we should pay higher taxes so that our neighbors with pets can get a tax break.

One of my favorite Congress, Thaddeus McCotter, is teaming up with one of my favorite Bond villains, Robert Davi, on a truly bad idea; tax breaks for pets.

"What a pro-active way to be able to help the economy and change the culture in this country around animals," Robert Davi, a veteran actor ("The Goonies," "Die Hard," "License to Kill") who was a main force behind the bill's introduction, told ABCNews.com in a telephone interview.

"This money goes back into the economy, and it encourages people to understand the social responsibilities we have toward animals," Davi said.

McCotter is sponsoring the HAPPY Act, which stands for Humanity and Pets Partnered though the Years. It would allow taxpayers to fully deduct the cost of pet care expenses from their taxes, capped at $3,500 per year. This would include veteranary care, meaning that health care expenses for pets would be deductible, but health insurance premiums for the self-employed would not. It excludes the actual cost of acquiring a pet, but would presumably include pet food, pet toys, and pet beds. An officially licensed New England Patriots pet jersey? Tax deductible.

According to the bill's findings, 63% of American households own a pet. That means 37% of us would be paying higher taxes to lower to cost of pet ownership for the rest of us.

We like tax cuts. Government takes too much money out of the economy, and leaves too little in out pockets. But this bill isn't really a tax cut. It's a tax expenditure. It uses to tax code to promote one kind of behavior, pet ownership, at the expense of everything else. People love their pets, and spend lots of money on them. Carving out a piece of the tax code for 63% of American households certainly sounds popular. But why not just reduce spending, reduce marginal tax rates, and leave more money in everyone's wallet? They can put it towards the care and feeding of Fido, their kids' college fund, or a weekend in Vegas.

The bill has been sitting in a drawer in the Ways and Means Committee since July, and isn't likely to see the light of day anytime soon. In the end, it will probably just be a nice way for McCotter, a Republican from Michigan, and his only co-sponsor, Tennessee Democrat Steve Cohen, to suck up to pet owners and claim that they are fighting for lower taxes. But bad ideas are bad ideas, and should be challenged.

IRS Made Errors in Stimulus Payments to 400,000 Taxpayers

The TaxProf Blog examines how the IRS has handled its duty to hand out money under the stimulus. Not well.

* The IRS issued more than $96 billion in advanced economic stimulus payments (up to $1,2000 for married couples filing jointly) to more than 119 million taxpayers in Calendar Year 2008 and approximately $8.5 billion in payments to almost 21 million taxpayers as of April 17, 2009.
* 259,000 taxpayers did not receive $84.6 million in payments due to various IRS errors.
* 141,000 taxpayers received $60.6 million in payments for which they were ineligible due to various IRS errors.

House panel plans seminar on state's tax structure

The Union Leader reports on the emerging details of the tax summit planned by the House Ways and Means Committee on October 21 and 22.

The session will include input from economists, educators, business people and national tax experts. They will be asked for opinions on current tax practices and what they think the state's revenue structure will be like in the near future, Ways and Means chair Rep. Susan Almy, D-Lebanon, said.

The sessions will be open to the public, but only committee members and senators who attend will be able to ask questions of those presenting testimony. Almy plans to start each day's program at 9 a.m.

Our President, Charlie Arlinghaus, has been asked to be part of a panel on the second day of the summit. NH Watchdog will provide continuing coverage from the State House. Who knows? We may even break out the ever-popular live blog once again.

Amendment X: Tax Competition

Our friends Paul Souter at Kansas Watchdog and Steven Allen Adams at West Virginia Watchdog take a look at how their states fared in the 2010 State Business Tax Climate Index.

Kansas becoming less business friendly

W.Va. ranked 37th in "Business Friendliness"

7th in the Nation

Can't win 'em all! New Hampshire ranks 7th on the Tax Foundation's 2010 State Business Tax Climate Index, and the best in the Northeast. Here's how we stacked up against our neighbors.

#7 New Hampshire
#8 Deleware
#27 Pennsylvania
#34 Maine
#36 Massachusetts
#38 Connecticut
#41 Vermont
#44 Rhode Island
#49 New York

Notably, New Hampshire ranks 50th on the report's Corporate Tax Index, down from 48th in 2006.

Hattip: Tax Prof Blog

And who ranked dead last among the 50 states?

New Jersey!

Tax Withholding Is Bad for Democracy

One of the most clever and sinister ideas every devised by a government bureaucrat is the concept of automatically withholding the payroll tax. With every paycheck the government involuntarily takes a portion of your money before it ever reaches your wallet.

From the government's perspective this is great. They get a steady stream of your money to spend and most people don't think about how much they're paying because it's incremental and semi-hidden. No doubt our national perspective on taxes and government spending would be quite different if every working person had to write a quarterly check to the government, just like tens of millions of self-employed people currently do.

So is the payroll tax. End them both and voters will have a healthier understanding of the government burden.

By CHARLES MURRAY

August 13, 2009

America is supposed to be a democracy in which we're all in it together. Part of that ethos, which has been so essential to the country in times of crisis, is a common understanding that we all pay a share of the costs. Taxes are an essential ingredient in the civic glue that binds us together.

Our democracy is corrupted when some voters think that they won't have to pay for the benefits their representatives offer them. It is corrupted when some voters see themselves as victims of exploitation by their fellow citizens.

By both standards, American democracy is in trouble. We have the worst of both worlds. The rhetoric of the president tells the public that the rich are not paying their fair share, undermining the common understanding from the bottom up. Meanwhile, the IRS recently released new numbers on who pays how much taxes, and those numbers tell the people at the top that they're being exploited. (more)

Taxing times?

The Concord Monitor weighs in on the tax and fee increases in the state budget. Their graphic is a little busy but maybe that's to be expected when you're trying to capture the breath and width of more than three dozen tax and fee increases recently approved by the legislature.

The state budget fight is over, but the spin goes on.

Monitor staff
August 10, 2009 - 8:04 am

Nearly six weeks into the new fiscal year, State House watchers are still debating the impact of the tax and fee increases signed into law by Gov. John Lynch to help balance the budget. Are they, as the Democrats say, modest in scope? Or, as the Republicans argue, are they already hitting New Hampshire residents hard?

The answer, of course, is a judgment call. No, there was no income tax, no sales tax, no gambling. But if you like to eat out or stay in hotels, you're likely to feel the pinch. Likewise if your car is sporting vanity plates or if you're still smoking cigarettes.

Here are two ways to think about the increases. The illustration above includes most of the words in the tax and fee portion of the state budget; the bigger the word, the more often it appears. (more)

No major tax increases; lots of small ones

In the Laconia Citizen, State Rep. Jenn Coffey pens a column excoriating the dozens of small tax and fee increases fueling increased spending.

I know voters do care about these issues and the effects all of these increased fees and taxes are having on their lives. How many are making cuts elsewhere in order to afford the increased fees on their vehicles? How many LLC are now struggling to hold on to their businesses?

Recently I was in a restaurant that had a sign posted informing their patrons of the increase in the meals tax; they stated they were going to try to absorb the increase for as long as they could, but foresaw having to raise their prices and possibly cut staff. (more)

Paying their fair share, and ours

The next time President Obama or another politician attacks the rich for not paying thier fair share of taxes, remember that the top 1% pay a greater share of federal income taxes than the bottom 95%.

This takes into account income taxes to the federal government, not state and local taxes, gas taxes, fees, and the other various ways that government takes our money, but it does show that we've greatly shifted the tax burden onto high income earners.

Hattip: Carpe Diem

We all failed the people of New Hampshire

Some people criticized the NH Legislature this year for spending too much time on social issues while not paying enough attention to the budget. At least one State Representative agrees. Kris Roberts, D - Keene, put it this way in a letter to the Keene Sentinel:

Published: Friday, July 24, 2009

The N.H. General Court spent a great deal of time this session on many social issues, such as the death penalty, transsexual discrimination, medical marijuana, marriage equality and numerous important personal social issues. While such issues deserve public attention, one must ask: Was this the time?

It seemed like very little time was spent on the budget, as New Hampshire was being repeatedly hit with rough economic waves that not only threaten our financial future but our standard of living and quality of life. I believe that the people elected us to address the needs of the state. If it meant that passing a realistic budget was the only issue on the agenda, so be it. (more)

41 and counting

Just a couple of weeks after our report A Rising Tide of Taxes and Fees outlined 38 new or increased taxes and fees in the state budget, the Governor and Legislature have found three more. New Hampshire Business Reviews outlines the latest changes to state law, including the three tax and fee increases:

• Fees for off-highway recreational vehicles, snowmobiles and the agents that sell and rent have increased. OHRV dealer registrations have gone up from $35 to $45.50, and rental agency registrations went up from $58 to $75.40 for each set of decals.

• Snowmobile registrations have increased from $75 to $90 for in-state residents and $90 to $110 for out-of-staters. (Members of the New Hampshire Snowmobile Association will still receive a $30 discount.) Snowmobile dealers’ registration fees have increased as well as rental agency registrations. Agents now must collect $3, rather than $2, for each OHRV and snowmobile registration issued.

• The tax on home heating oil will rise a quarter-penny to 1.25 cents to help clean up the mess left by leaking tanks. The increase sunsets next summer, or if there is enough money ($2.5 million) in the fuel oil discharge cleanup fund. (more)

Tax Hampshire or Fee Hampshire

Here's the online archive of yesterday's edition of The Exchange on New Hampshire Public Radio.

http://www.nhpr.org/audio/audio/ex-2009-07-22.wax

Host Laura Knoy discusses the 38 new or increased taxes and fees in this year's budget, with guests Charlie Arlinghaus and State Rep. John DeJoie.

Nashua looking to tax downtown

The Nashua Telegraph's Kevin Landrigan reports on efforts to tax downtown Nashua businesses in order to promote downtown businesses:

Under the proposal, which is being advocated by the Great American Downtown, downtown property owners would pay a special tax that would be used for marketing, maintenance and other purposes within the new district.

While the legislation only would establish a “services advisory committee,” current thinking calls for the district to run along Main Street from the Hunt Community to the Hunt Memorial Building, then a block or two east and west of Main Street. (more)

When you tax something, you get less of it. Apparantly, Nashua Aldermen think they are too many businesses on Main Street and would like to thin the herd through higher taxes. If local buisiness owners want to band together to promote Downtown Nashua as a retail, dining, and entertainment destination, they can that. Of course, some business owners may not want to spend their money for the group effort, but would presumably benefit from it. To get past this free-rider problem, the businesses are turning to local government to force everyone to participate.

Landrigan quotes Manchester's Dick Anagnost, who opposed a similar idea in the Queen City in 1990, but has become a strong supporter. Elm Street has certainly prospered over the last two decades, but we don't know how much is attributable to the InTown program. Nor do we know the full cost to businesses and consumers over the years.

Fosters- N.H. retailers are not tax collectors for other states

Foster's editorializes about New Hampshire's efforts to prevent Massachusetts from going after Granite State retailers to collects its sales tax:

It is a short drive from the communities of northeastern Massachusetts to the tax-free stores of southern New Hampshire. It is often worthwhile to make a special buying trip, and last month's 25 percent increase in the Bay State sales tax make it even more inviting. The Massachusetts sales tax now stands at 6.25 percent.

There is an old sports axiom that holds well even outside of athletics: the best offense is a good defense. New Hampshire strengthened its D this year with a statute that protects New Hampshire business from having to be complicit in taxing Massachusetts residents. (more)

Border Tax War heats up

Mark Hayward reports in the Union Leader about a new law Governor John Lynch will sign today, putting up roadblocks on Massachusetts tax collectors going after shoppers in New Hampshire:

But a Massachusetts lawyer involved in the Town Fair Tire case questions how the law will be enforced, and whether Massachusetts officials will comply with it.

"It'll be interesting to see how this plays out in actual practice," said David Nagle, an attorney with the Boston firm of Sullivan & Worcester. He questioned what will happen when a multi-state retailer tries to follow the Granite State law while a Massachusetts auditor is handing him a summons that demands customer addresses.

"I'm certain that New Hampshire did not intend to put retailers in a bind between a rock and a hard place," he said. "The question, I think, is what leverage does this (new law) give a retailer who receives a summons from the Commonwealth of Massachusetts?" (more)

The New Hampshire Economic Recovery Coalition

While New Hampshire's Legislature seems intent on wiping out the New Hampshire Advantage, raising 38 taxes and fees so far this year, the Telegram reports that the Massachusetts Legislature is doing its part to help the Granite State bounce back:

Come Aug. 1, the state's recently raised 6.25 percent sales tax will apply to alcoholic beverages, a cause for concern for sellers on the state's northern and southern borders. In the north, merchants fear the new taxes will drive business to sales tax-free New Hampshire, while stores on the southern edge of the state will lose some of the competitive advantage they have enjoyed over Connecticut and Rhode Island.

Proponents argue that applying the state's new 6.25 percent sales tax to alcohol will bring in nearly $80 million for substance abuse programs. They also note that New Hampshire charges more in excise taxes on beer than Massachusetts, so the disparity in prices caused by the sales tax will not be as high.

We are pleased that Massachusetts and Vermont continue their efforts as part of the New Hampshire Economic Recovery Coalition.

Hattip: Union Leader

Going up: 38 hikes for NH taxpayers

Dan Touhy writes up the Josiah Bartlett Center's latest report, "A Rising Tide of Taxes and Fees", in this morning's Union Leader:

When he signed it into law, Gov. John Lynch called the budget "a responsible, balanced budget" that funds essential services without burdening residents with a new, major tax. The budget includes layoffs of about 200 state employees and calls on $25 million in additional personnel reductions.

The report by the Josiah Bartlett Center, a nonprofit and nonpartisan organization, also covers three fees involved with legislation this year, including a $200 increase for non-resident commercial saltwater licenses.

"The distinction between a tax, a fee, and a charge is blurry and probably of little importance to the one paying," Arlinghaus writes.

In total, the Legislature has already created or increased 38 separate taxes or fees, costing more than $300 million.