N.H. Senate panel says no to three of four business tax break proposals
But there’ll be a closer look at credit for vo-tech high school donations
The New Hampshire Senate’s Ways and Means Committee gave the thumbs down to three tax breaks for businesses Tuesday, but said it wants to take a closer look at another, which would help encourage donations of training or equipment to vocational and technical high schools.
The committee recommended that the full Senate kill:
• Senate Bill 255, which would give angel investors who finance startups a credit against their personal interest and dividends tax.
• SB 312, which would expand a Coos County job creation tax break statewide, with stricter criteria.
• SB 316, which would give a tax credit against the business profits tax for call centers, based on the number of employees they hire.
Supporters of the bills argued that the breaks would encourage investment, create jobs and contribute so much to the economy that the state would eventually gain more revenue that it would lose.
But the three Republicans who dominated the committee argued that it would be better to simply lower the tax rate than create a confusing “patchwork” system that would pick “winners and losers.”
“Funding the I-93 expansion will do more than any of these tax breaks,” said Senate President Chuck Morse, R-Salem, who said he was more interested in a suggestion – by Seacoast multimillionaire Paul Montrone – of lowering the BPT from 8.5 to 7.9 percent.
But Sen. Andrew Hosmer, D-Laconia – who joked, “I never saw a tax credit I didn’t like” – said that each individual break had its appeal and ended up backing the three that were voted down.
The committee’s chairman, Bob Odell, R-New London, put off voting on SB 335, the vocational-technical school measure, deciding to continue the hearing so he would get more input from business leaders.
SB 335 would give businesses a credit for as much as 25 percent of their BPT, though the aggregate credit would be capped at $2 million. If the demand for the credit exceeds the cap, the credit would be proportionally reduced.
The credit would help those vocational schools, which feed local industry with trained workers but “struggle to keep up with changing technology, because it’s so expensive,” said the bill’s sponsor, Sen. David Watters, D-Dover. The training incentive would enhance partnerships with the school with local businesses, which could stem the exodus of skilled students out of state, he added.
It was SB 255, which extended an existing tax break for venture capitalists to individual angel investors, that resulted in the most vigorous debate.
“The first $50,000 to a company that has nothing is the hardest to raise,” testified Marc Sedam, who works with startups as managing director of UNH Innovation.
Individual investors, not venture capital companies, are the ones willing to take that kind of risk, but New Hampshire, unlike surrounding states, doesn’t offer them an incentive to do so, said Sedam.
“We have an investment gap in our state,” said the bill’s sponsor, Sen. Sylvia Larsen, D-Concord.
The tax break would go to those who invest in firms with 20 or fewer employees with capitalization equal to or less than $500,000, and would reward those who invest $30,000 to $250,000, up to 25 percent of the amount invested. The aggregate break is capped at $1 million.
If it exceeds that amount, the New Hampshire Business Finance Authority, the same agency that administers the venture capital break, would decide who gets the money, based on established criteria, such as giving preference to firms in the less economically developed part of the state.
“If you pick North Country firm versus the Seacoast, you are picking winners and losers,” Odell said.
Since the break would go to individuals, it would be against the interest and dividends tax.
That small break won’t persuade angels looking to make a killing, argued Sen. James Rausch, R-Derry.
“Interest and Dividends are not even on their plate,” he said.
But it would make a difference to first-time investors, who are hesitant to take the risk, countered Hosmer.
“It would encourage retirees who are on the sidelines, give them an incentive to put that money to work,” he said.
The committee voted to kill the bill, 3-2.
SB 316, said sponsor Sen. David Pierce, D-Lebanon, would expand a successful job creation credit in Coos County, a program that created 85 jobs for slightly more than $100,000 since it started in 2008. And the Senate voted just last year to extend it for another five years, Pierce pointed out.
Like the Coos County credit, the bill would give a $1,500 credit for each job created, but unlike it the expanded credit would be restricted to businesses with 75 or fewer employees, and only if those workers were previously unemployed, hired at 175 percent of the minimum wage (as opposed to 150 percent), and were kept on the payroll for at least two years.
The Department of Resource and Economic Development said it would be costly to administer the credit, and there was the thorny question of what to do about jobs “created” though mergers and acquisitions, when they are actually are the same job shifting to a new company.
SB 316 would grant a $2,500 tax credit for each employee but only if they worked at a call center. These workers would have to make twice the minimum wage. And the aggregate credit would be limited to $2 million
Sen. Donna Soucy, D-Manchester, argued that call centers offered “better quality jobs.”
Odell questioned that claim, noting that the jobs created by the research and development tax credit pay an average of $84,000.
“If I had million dollars, wouldn’t I want to invest it in a proven program like that, rather than a new program that picks up a separate industry?”
But Comcast lobbyist Chris Hodgdon said that, while the jobs may not pay that well, “they do offer an advancement skill set” for many workers. The Comcast call center in Manchester, he said, about 550 people.
Odell was unconvinced. Handing out tax breaks for individual industries “is a dangerous place to go.” The committee voted the bill down 3-2.Edit ModuleShow Tags