Income tax gets a boost at forum

MILFORD – We are “little frogs in our own little pots of water, and some of us get boiled,” said state Rep. Jill Shaffer Hammond, using an unusual metaphor during a recent panel discussion about taxes in New Hampshire.

“We’d all be up in arms” if New Hampshire had a state income tax that went up at the rate property taxes are rising, she said, but individual homeowners “don’t have a sense of what’s going on,” and so they don’t organize to change our tax structure.

Hammond, a Democrat from the town of Hillsborough, was among a dozen people who attended a forum at the Milford Town Hall on Wednesday night hosted by the Granite State Fair Tax Coalition. The coalition has long fought against the reliance on property taxes – a position that often equates with support for an income or state-wide sales tax.

Mark Fernald, a former state senator who ran unsuccessfully for governor in 2002 on an income tax platform, moderated the panel.

New Hampshire’s tax system is regressive, he said, meaning the less well off pay more in taxes than the affluent.

The Union Leader, the state’s largest newspaper and its pledge against broad-based taxes are partly blamed for the situation, several people said.

“A lot of this goes back to Bill Loeb and the Union-Leader,” said state Rep. David Kidder, a Republican from New London, referring to the late owner of the Manchester newspaper.

Property taxes made sense 300 years ago, Kidder said, because property was taxed based on the income it produced and residential property was exempt. But now, he argued, the state goes from “one crisis to another” because it essentially runs on property taxes.

Dennis Delay, a economic consultant for the New Hampshire Center for Public Policy Studies, argued that the economic crisis, and particularly the collapse in housing prices, made this “the right time” to examine changes to the tax system.

He argued that the end of the “housing bubble” makes it “inevitable that property tax rates will go up,” especially since corporate income, the basis of some state-level taxes, is declining, which increases the pressure on town-level tax income.

Several people said any push for an income tax would be difficult because lawmakers are afraid to talk about it.

“You don’t get killed for taxes you don’t make,” said former state representative Mike Marsh of Greenland, a House majority whip before he lost his reelection bid last November.

Property taxes aren’t the responsibility of state lawmakers, since they are a function of towns and school districts.

Milford state Rep. Bob Willette did not attend the event, but he agreed in a phone interview the next day “the word ‘income tax’ scares lawmakers,” and the chances for one in New Hampshire are “slim and less than slim.”

Unlike most at the panel, Willette supports the current tax system.

“I don’t think (property taxes) are unfair,” because people who have the most expensive houses have the greatest burden.

“I’ve been on a fixed income for 14 years, and I pay a lot in property taxes, but compared to other states I pay less,” he said. “New Jersey did not decrease its property taxes (after it instituted an income tax). I think we can control the budget by controlling spending.”

The Granite State Fair Tax Coalition was formed about five years ago and is an outgrowth of the New Hampshire Council of Churches’ public policy committee, said Ruth Heden of Milford, who helped organize the event.

About 70 New Hampshire towns and cities, including Milford, Amherst and Wilton, passed the Fair Tax Resolution in 2008, a non-binding resolution that called on state lawmakers to reject the pledge against so-called broadbased taxes, and which called the property tax “unfair and unjust.”

Kathy Cleveland can be reached at 673-3100 Ext. 21 or