Is NH Warming Up to an Income Tax?

According to many Republicans, NH is threatened by a new order of Democrats intent on adding a broad-based income tax. It is true that some Democrats argue “the pledge” against an income or sales tax cuts off important discussion about fair tax policy, but that is not a new argument. A look at 2020 candidate platforms shows there is still little support among Democrats for a general, broad-based income tax. However, there is support for a more limited tax with a specific purpose.

2020 vs. 2018
Surveys conducted by Citizens Count each election year of candidates for state and federal office in NH, as well as research on their stands on issues, shows Democrats are more open to an income tax than Republicans, but there’s still little outright support for an income tax.

Among the 2020 candidates for state legislator, 18% of Democrats supported an income tax, 37% opposed an income tax, and 45% were undecided or had a more nuanced position.

In contrast, 99% of Republican candidates for state representative and state senator opposed an income tax. Less than 1% supported, were undecided or had a more nuanced position.

These numbers are similar to findings in 2018. That year, 17% of Democrats with a known position supported an income tax, 36% opposed, and 46% were undecided or had a more nuanced position. That year, 99% of Republicans definitively opposed an income tax.

The Leave Debate
Republicans and Democrats disagree on what may constitute an income tax, which complicates the issue. In recent years, Democrats (and some Republicans) have supported a plan for statewide family and medical leave with premiums based on 0.5% of an employee’s wages. Democrats argue this is similar to the unemployment tax and nothing like a broad-based income tax. Gov. Chris Sununu was one of the first Republicans to call it an income tax.  

According to our survey and research, 94% of Democratic candidates in 2020 definitively supported that plan for paid family and medical leave compared to just 2% of Republicans.  

The Capital Gains Tax Debate
The last legislative session also saw a proposal for a capital gains tax tied to school funding. For some Republicans, this is encroaching on the territory of an income tax.

According to our data, 70% of 2020 Democratic legislative candidates supported a capital gains tax, while 9% opposed. The remainder were undecided or had a more nuanced position. Starkly, 96% of Republicans opposed a capital gains tax.

What About a Sales Tax?
Legislators are less open to a sales tax. According to Citizens Count data, just 7% of Democrats in 2020 supported a sales tax, 55% opposed a sales tax, and 39% were undecided or had a more nuanced position.

Unsurprisingly, 99% of Republican candidates for state representative and state senator opposed a sales tax with 1% undecided or had a more nuanced position.

Interpreting the Numbers
Between school funding lawsuits and the coronavirus crisis, next year’s legislators are going to have to make some difficult budget cuts and potentially raise some taxes.

Based on candidate data, it appears unlikely that a general broad-based income tax will pass in 2021. However, a more limited income tax, dedicated to a specific purpose like school funding, stands a chance. A sales tax is highly unlikely.

Legislators in both parties are more likely to find common ground on a cigarette tax increase, a road usage fee, marijuana legalization or historic horse racing.

Finally, a disclaimer about the numbers: at the time of this article’s drafting in October, 41% of Democrats and 12% of Republicans still had an unknown position on an income tax. On the family and medical leave issue, 31% of Democrats and 36% of Republicans had an unknown position. On the capital gains tax, 38% of Democrats and 40% of Republicans had an unknown position. Lastly, on the sales tax issue, 42% of Democrats and 13% of Republicans had an unknown position. It is possible that the remaining candidates could have different positions.

Anna Brown is director of research and analysis for Citizens Count in Hampton, which surveys candidates on issues. To know where candidates and legislators stand on an issue, visit CitizensCount.org.