NH needs to lower business taxes to compete
What we are doing clearly isn’t working
The New Hampshire advantage used to be easier. No sales tax. No income tax. Rely on our neighboring states to do something uncompetitive. New Hampshire had always been able to make our state a competitive place to do business, simply by avoiding the mistakes of those around us.
But our friends and neighbors are catching on by actively lowering barriers to businesses and creating jobs far faster than we are. If New Hampshire is going to compete for jobs and economic growth, we need to reform our business tax climate, what we are doing clearly isn’t working.
New Hampshire is lagging behind. A recent report, from The Pew Charitable Trusts, ranks us in the bottom 10 for job creation since the last recession.
The Tax Foundation ranks New Hampshire 48th for corporate taxes. The Business Profits Tax sits at 8.5 percent, while Massachusetts and Rhode Island have lowered their rates to drop below us. And no other state has anything comparable to the Business Enterprise Tax, which charges entrepreneurs 0.75 percent on their payroll and investments, whether or not the business is making money.
If we do nothing, New Hampshire will soon have the highest business taxes in New England.
The Legislature has approved a plan to make our business climate more competitive, providing tax relief to our state’s private sector employers, and sending a signal that the Granite State is again open for business. By phasing in modest reductions in the BPT and BET over the next five years, we would lower the cost of doing business in New Hampshire, and leave our employers with more money to reinvest in their businesses, add jobs, or provide pay raises to their existing employees.
This would be the first reduction in the BPT in 20 years, and the first time we’ve ever cut the rate of the BET.
Our plan for cutting business taxes was included in New Hampshire’s operating budget, and accounted for the $21 million in tax relief to ensure the budget is balanced.
To put this in perspective, enacting the modest reductions costs $21 million out of a $11.3 billion budget, equaling 0.2 percent, rounded up. Unfortunately, Governor Hassan does not believe we can afford a modest reduction in our business tax rates, and vetoed the entire budget.
But if now is not the right time to lower business tax rates, when is the right time?
We should not settle for being 48th in the country. We want to do more to encourage businesses to move here, encourage the ones that are here to add jobs and pay their employees more. Doing nothing eliminates increased opportunities to have good jobs that could keep young people in our state. Ask the parents of graduating students, have they been able to find a job? For too many families and newly graduated students, the answer is no and we need to do more.
With her steadfast opposition to lowering business tax rates and consistently proposing tax increases throughout her career, Governor Hassan seems to have decided that businesses are the enemy. Her rhetoric attacks us for trying to help “out-of-state corporations,” which is not only false, but misses the point entirely.
Our business tax cuts would benefit every business that pays taxes in New Hampshire, which covers 95 percent of the private sector workforce. From mom-and-pop stores to Market Basket, and from startups to BAE Systems, we want all of our businesses to thrive and create new jobs. Attacking good employers who happen to be headquartered out of state is shortsighted and remarkably counter-productive.
We’ve made great strides this year to lower workers’ compensation costs, lower electric rates and update our banking and securities laws. Lowering business taxes is the next necessary step to reviving the New Hampshire economy and the appropriate time is right now.
Governor Hassan says tax relief comes “at the expense of critical economic priorities.” We strongly disagree with her. Jump-starting New Hampshire’s job creators is an economic priority.
Sen. Chuck Morse, R-Salem, is president of the NH Senate.