Capital gains tax is wrong for New Hampshire
To the editor:
With several high-profile issues brewing in the state budget battle, one that is starting to get attention is House Bill 686. This bill is a Democratic proposal which implements a 5% tax on capital gains.
The money raised, approximately $130 million, will be used to help fund schools and to help lower the state portion of the property tax burden. Cloaked as just an “extension of state’s interest and dividends tax”, this new tax would be a major change to the New Hampshire tax structure and would disproportionally affect people that work in the investment and financial industries.
As a former owner of a medium-sized high-tech business based in New Hampshire for over 30 years, I now make my living through early-stage investments in startup companies and through equity investments in established businesses. Some of these investments are in local companies.
Investing is a risky business and a tax on capital gains is a disincentive to make these investments. The end result of this tax will be decreased investments, which is a detriment to growth and new job creation. (Further, it removes any advantage New Hampshire has over other New England states as, with taxes on dividends, interest and capital gains, we’ll be similar to all the other high tax NE states.)
New Hampshire will have a tough time defending that it’s the state of no personal income tax when three out of four sources of income would be taxed. In the end, this bill is simply a method for wealth redistribution, as the vast majority of the funds raised will come from 1 to 2% of individuals/families. If additional funding for schools is truly needed, it should come from all taxpayers, as providing a good education is a benefit to everyone.
Should this bill become law, New Hampshire will lose those hit hard by this new tax as they will relocate to states that welcome investors. Those states will be the beneficiary if this bill passes, not New Hampshire.