Targeted tax cuts affect the rest of us
We have spent a lot of time and creativity over the years finding cheaper ways to provide effective services, but we cannot make bricks out of straw alone
I would like to reply to my esteemed colleague Bob Odell’s column in the Sept. 5-18 NHBR (“Why is Gov. Hassan bashing bipartisan tax reforms?”) about bipartisan tax reforms enacted last term.
First, as a matter of context, New Hampshire’s general/education fund revenues have declined 22 percent from fiscal year 2003 to FY 2014 in inflation-adjusted terms. That is inflation as measured nationally, and as the items bought by consumers, not governments.
Data for the last few years for these two categories are not yet available, but in prior years both Northeastern regional and governmental inflation have been higher than the U.S. CPI-U. We have lost something over 22 percent of the buying power of the state in a dozen years.
Second, the tax reforms listed in the article, and others not cited but passed last term, are all tax cuts. If businesses want public safety, access to the courts, educated and trained employees who work well because they are not struggling alone with addiction or mental illness, reasonable health costs, and a host of other services that once made for the great business environment New Hampshire has enjoyed, they should not at the same time advocate for tax cuts that are not balanced by revenue increases somewhere else, which these were not.
We have spent a lot of time and creativity over the years finding cheaper ways to provide effective services, but we cannot make bricks out of straw alone.
Business recruiters and tax economists have consistently told me that taxes are near the bottom of wish lists of businesses seeking to expand in or into a state. In states with much higher tax burdens, targeted tax credits greatly reduce the burden for selected businesses, shifting the burden to other businesses and to their citizen-customers.
Third, these tax cuts and the others not cited were not accounted for at all in the FY ‘12-‘13 budget passed last term, because they were all enacted to begin only after that budget ended, passing a huge problem down to future legislatures.
Budget rules require only an analysis for the current budget, and that was zero. The only tax cut cited that meets responsible budgeting principles is the research and development tax credit increase of $1 million a year, which occurred this term and was proposed by Governor Hassan.
Fourth, in truth, the Department of Revenue Administration does not have access to enough data to project a meaningful estimate of cost for most of the tax cuts passed last term.
I have been advocating for years that we put off that kind of tax change until we can get such an estimate. And most of the cuts will probably only produce a significant effect on revenues in FY ‘16-‘17 (next term) or in the next economic downturn.
Between the changing economy (structure and trend) and these non-transparent cuts, revenue estimators will be flying blind next term. And that means that these cuts, most of which are targeted only at selected businesses, with costs and benefits that were not estimated, will affect the services available to all.
State Rep. Susan Almy, D-Lebanon, is chair, of the House Ways and Means Committee.