Who elected this guy? None of us
In their thirst for more of our money, state administrative officials have confused the closing of an inadvertent loophole in the tax code and making a decision to impose new taxes. In doing so, they have crossed the line between their job, which is to carry out administrative duties, and policymaking, which is the purview of elected officials.
The new leadership of the Department of Revenue Administration has advocated a series of new taxes under the guise of “closing loopholes.” According to the Associated Press, “New Hampshire’s tax collecting agency wants to apply a 7 percent tax on a variety of telephone and Internet services from chat rooms to voice mail.” Tellingly, the administrators propose to expand the tax by rule rather than by law.
This bureaucratic foray into policymaking follows their earlier effort to impose taxes on previously exempt QIC and QICC corporations, an incentive purposefully written into the law by elected officials to attract high-tech business and capital to the state. That new tax was described as “eliminating a loophole.” Thankfully, the people we actually elect to represent us chose only to accept a small portion of that misguided proposal.
Whether the new taxes are a good idea or not is a separate point. Having bureaucratic officials propose new taxes subverts the democratic process and undermines our ability to hold elected representatives accountable. The department seemed to acknowledge that fact when it said earlier this month it would withdraw the proposed taxes, in part because the proposal appeared to cross the line into policymaking.
In general, we the people elect representatives to act on our behalf in Concord. We deputize representatives to consider policy, decide which items to tax and how to spend the tax revenue. An elected chief executive then appoints civil servants to carry out the administrative functions of the policies enacted on our behalf. The civil servants are held less directly accountable because their function is administrative not policymaking.
New taxes are unpopular. So one method lawmakers tried was to “extend” taxes. The Room and Meals Tax was “extended” to rental cars (which are neither a room nor a meal by traditional definition). As these extensions were attacked, new tax proposals began to appear under the guise of closing loopholes.
Closing loopholes always sounds like a good idea. Loopholes sound like a gimmick or special exemption written into a complicated tax code by a lobbyist. However in New Hampshire, most so-called loopholes exist on purpose.
Consider the property tax. This “loophole-ridden” tax is assessed only on your house and land. The government does not tax other property, like your clothing, your furniture, your car. Communication and Internet taxation is similar.
The 1990 telecommunications tax did not include things like e-mail and Internet chat rooms (which didn’t amount to much in 1990). But adding a new e-mail tax is no more closing a loophole than adding furniture to my property tax would be. As such, it should be proposed, debated and explained by the people we elect to determine tax policy not inserted into regulations by an unelected administrator.
When our senators vote to change tax policy, they have to defend that decision in the heat of an election season — an adversarial environment that forces each side of an issue to explain themselves to the people. The revenue commissioner is not subject to the accountability of public debate, town meetings, election forums and a vote on the ballot. Because of that, he exists not to set policy but to administer it.
Similarly, taxes adopted at the suggestion of bureaucratic leadership offer another threat to accountability. If a senator can say, “We made technical corrections proposed by our tax expert,” he shifts responsibility to a faceless, inaccessible expert as if to say, “I didn’t want to but ‘they’ made us do it.” Less popular decisions will be increasingly sheltered from public scrutiny and public accountability.
The people we trust to make policy on our behalf must stand accountable for their actions on election day. Let’s keep it that way.
Charlie Arlinghaus is president of The Josiah Bartlett Center for Public Policy, a free market think tank based in Concord.