While our political leaders squabble about a less than 2 percent difference in budget proposals, they are ignoring the bigger debate of whether our tax structure still meets NH’s needs, leaving the business community twisting in the wind.
Instead of leadership and compromise, we got Democratic Gov. Maggie Hassan and the Republican leadership digging in their heels and going home for the summer. And instead of a budget that includes increased funding for higher education to feed the workforce pipeline or provides tax relief for businesses, both needed, NH’s business community got uncertainty.
And what is the one thing guaranteed to slow the economy?
Uncertainty.
Yes, we need to keep spending under control. And that requires a well thought out, long-term plan for the state and a tax structure that allows critical needs to be met without overburdening businesses.
The tax issue, though, does not exist in a vacuum. It is unrealistic to lower taxes and then expect businesses to flock here if our high quality of life, infrastructure and highly educated workforce deteriorate. And you can’t play Santa and give big tax breaks to businesses if it’s predicated on creating a huge budget hole that will need filling in a mere two years.
Despite the gnashing of teeth about our rising business taxes, NH still ranks seventh among the 10 best states nationwide in the 2015 State Business Tax Climate Index released by the Tax Foundation. Yet, we know our recovery has been slower than our neighbors, and some say that is in part due to escalating business taxes. As Charlie Arlinghaus of the Josiah Bartlett Center for Public Policy recently pointed out, business taxes have risen from being 14 percent of the state’s operating budget in 1995 to 25 percent today.
The majority of the states in the top 10 are there because they lack a major tax. Others though, such as Utah and Indiana, have all the major taxes but levy them at low rates over broad bases. And neighboring Taxachusetts, ranked 24th, and California, ranked 48th, continue to be home to some of the biggest, innovative players in the economy despite their tax burdens. Why? Because they invest in areas such as higher education and infrastructure.
So let’s stop talking about business taxes in a vacuum. Instead, let’s talk about what the NH Advantage should look like and what is the tax structure and spending plan that will get us there.