NH Senate shoots down targeted business tax breaks

R&D credit change proposals, three others sent to study

New Hampshire businesses shouldn’t expect any targeted tax breaks this session. That, at least, is the conclusion most people would come to after the NH Senate dismissed four of them on Wednesday.

While Democrats argued for the specific merits of each proposal, Republicans said they needed to study the cumulative effects of all of the tax breaks in light of the new federal tax bill and to consider instead changing the tax rate affecting all New Hampshire businesses.

“Do we want to reduce taxes for everybody or just for a few specific people?” said Sen. Andy Sanborn, R-Bedford.

Several Republicans, however, broke ranks on the bill, which would have made the research and development tax credit more flexible.

It would give those eligible for the credit a cash rebate of 75 percent of what they are due, as opposed to getting a credit against the business profits tax or the business enterprise tax over five years.

Some startups may not have any tax liability over several years, and they need the cash now. The Senate had passed the bill unanimously, but the Ways and Means Committee voted 3-2 to send it to study.

“This is an opportunity to help new companies get started,” said Sen. Lou D'Allesandro, D-Manchester. “What are we doing here? We all voted for this. Now we are putting it to bed and its untimely death.”

Sen. Bob Giuda, R-Warren, agreed it was a good program, but said that the Senate needed to look over the bill “in an abundance of caution,” but Sanborn, who previously had voted for the bill, now questioned its policy as well.

The state wants to “give companies free access to capital for a 25 percent haircut. It’s like an angel investor with no equity and no return. This bill would look to cut them a big check.”

Sen. Dan Innis, R-New Castle, questioned whether it would matter to the state whether it forgoes the money now or later, but Sanborn said that some companies would never have a tax liability and would end up not paying any taxes later. The Senate voted, 12-11, to send the bill to study.

Another bill, SB 75, would allow a total of $500,000 in tax credits for donations of equipment or training to the state’s career and technical educational centers.

The idea is that then a vocational high school student “can train on the actual equipment that they will be using if they are employed” they would be immediately ready to work at the company, said Sen. David Watters, R-Dover.

“Our manufactures are crying out for workers,” he said. “This is one thing we can do for workforce development. This is what we need to cement the partnership.”

Rather than send the bill to study, Watters pleaded with other senators to put off implementation until July 1, 2019, so it can be included in the next state budget.

Sanborn, however, wanted to put it in the context of other tax breaks. He estimated that the state already gives $360 million in tax breaks “for our friends and specific groups for behavior” without detailing them. “We could cut our business taxes by 50 percent if there were no special deals,” he said.

The Senate sent that bill to study on a strict 14-9 party-line votes.

That also was the fate of House Bill 574, which would increase the limit on contributions to the Community Development Finance Authority from $5 million to $6 million. Businesses get 75 percent of their contributions in return for donating to projects endorsed by the CDFA.

“This is a modest change to a program and an organization that we know works,” said Dan Feltes, D-Concord.

The bill easily sailed though the House on a voice vote, but in the Senate, it was sent to study, 14-9.

SB 183, which would have given $1 million in tax credits for tech companies recruiting skilled professionals to move to the state, was sent to study without debate and on a voice vote.