New Hampshire’s faded glory
The American Legislative Exchange Council recently released its 2009 “Rich States Poor States” report ranking the economic potential of all the states. New Hampshire, flying high in 2007, has received a flunking grade.
In just two short years from having elected a new legislative majority, New Hampshire has fallen from a ranking of No. 20 nationally to a ranking of No. 37 today. In other words, New Hampshire has fallen 17 positions in rank in relation to all other states and is now just 13 places from the bottom.
The report’s authors, Arthur Laffer, Stephen Moore and Jonathan Williams, periodically evaluate all states on the basis of their tax rates, tax burden, recently legislated tax changes, debt service, public employees per 10,000 of population, state liability system, state minimum wage, worker’s compensation costs, right to work and tax expenditure limits.
The five top-performing states are Utah, Colorado, Arizona, Virginia and South Dakota. The five worst are New Jersey, Maine, Rhode Island, Vermont and New York at the bottom.
Legislatures wanting to promote long-term growth and prosperity for their states do so by promoting less government, less regulation and a favorable tax climate for individuals and for businesses. Until recently, New Hampshire thrived on this approach to government.
In 2007, New Hampshire led all northeastern states in terms of economic growth and prosperity. It was then the Northeast’s economic powerhouse. The glory of that era has now dissipated. Today, New Hampshire ranks behind Massachusetts, No. 26, and behind Connecticut, No. 32, as a desirable place to invest, to build a business and to create jobs.
In addition, New Hampshire is performing worse than average in gross state product growth, in personal income growth and in personal income per capita growth.
The calamity of New Hampshire’s steep decline in national and regional economic prestige over such a compressed period of time is entirely due to its Legislature’s enactment of toxic regulatory, tax and spending initiatives.
In 2007, New Hampshire’s governor and Legislature increased state spending by more than 17 percent over the previous biennium and increased more than 20 taxes and fees to pay for growth in government. Calculations and projections by the majority were inept, however, and instead of covering costs, the Legislature caused New Hampshire’s deficit to balloon hundreds of millions of dollars out of control.
Oblivious to the damage wreaked on the state’s economy by ill-advised past policies, the House recently passed an 8 percent tax on estates larger than $2 million, passed a 5 percent capital gains tax and voted to increase existing taxes on dining out, on renting hotel rooms, on cigarettes and on gambling winnings.
A prosperous attorney friend of mine in Manchester, who actively invests and advises other investors on the implications of tax policy, told me at lunch the other day that because New Hampshire’s new political regime has chosen to penalize risk-taking and success, he and his wife are now seeking to establish a new domicile in Wyoming.
Wyoming is No. 6 on the American Legislative Exchange Council list.
Paul Mirski of Enfield Center is a former Republican state representative.