"Real liberty is neither found in despotism or the extremes of democracy, but in moderate governments.
Alexander Hamilton

Sunday, June 7, 2015

NH Senate Proposed Budget Underestimated Impact of Business Tax Cuts

The budget approved by the Senate Finance Committee proposes reducing the business profits tax (BPT) from 8.5 percent to 7.9 percent by the end of 2019 and lower the business enterprise tax (BET) from 0.75 percent to 0.675 percent in the same time period. 
In a letter form NH Department of Revenue Administration Commissioner John T. Beardmore to Governor Hassan, it seems that the impact to revenues may have  underestimated. 
The Senate Finance Committee assumed that there would be no impact in 2016, but Commissioner Beardmore disagreed. The proposed effective dates of the tax cut ( beginning July 1st 2016) would result in an additional loss of $3.8million in revenue for 2016. According to Beardmore this “...is the result of adjustments that are likely to occur with the first two business tax estimate payments for Tax Year 2016, which are due in FY16.” The DRA also estimates that the 2017 revenue loss would now be $19.4 million, about $5 million more than the Senate estimated.
The end result is that there will be an additional shortfall of $9 million that will require additional cuts in spending to balance the budget. 
In the same letter from the DRA, the vast majority of the revenue reductions would be enjoyed by a very small number of NH businesses. There were 718 businesses in NH that paid more than $1 million in BPT 2012. That represents about 1.1% of all NH business entities. In total, they paid 75.8% of the BPT. Of the $9.9 million reduction in BPT, this 1 percent of NH businesses would receive a savings of $7.5 million, or 76% of the estimated total tax cut. This undercuts to some degreee the argument that the reduction in BET and BPT will cause more small businesses to relocate or be created here in NH. 



6 comments:

Joe Cormier/jcormier2@myfairpoint.net said...

Who or what does the "estimated business" calculation for NH ... in order to determine the "estimated tax"?

One for you ...one for me ...!

Is it the same folks who do the complaining in MoBo, that MobO is not bringing-in new, young families, that require jobs, ... and then go into cardiac arrest, if there's talk of developing an area for business enticement, and screech at the town meetings that we have to maintain the Heritage or Conservation?

What business would want to come to MoBo with the present mentality?

It's nice, knowing nothing is going to change in MoBo.
Let Meredith and Center Harbor go for change ... and MoBo can ride the coattails.


June 2, 2015 Beardmore letter to Gov. Hassan:

http://www.nhfpi.org/wp-content/uploads/2015/06/Ltr-to-Governor-re-BT-rate-reductions.pdf

Terence C. Jatko said...

Several points need to be made:

The sense of entitlement (to other peoples' money) our politicians and bureaucrats have is disgraceful. There is never any mention of REDUCED SPENDING, just more and more spending despite changes in the revenue streams.

Reductions in tax rates do not necessarily mean reductions in income. The reductions in capital gains rates during the George W. Bush years led to INCREASED capital gains revenues.The economy is not static; changes in one area affect other areas. Business adapts and changes to fit new tax environments.

http://finance.yahoo.com/news/capital-gains-tax-revenue-risen-233200669.html

So what if large businesses will benefit more? They pay more in taxes. Maybe those businesses will do useful things with their tax savings like hire more workers or upgrade their facilities.

Or maybe the large business owners will install new gold-plated taps in their hundred-foot yachts.It's their money,they earned it, who cares?

Anonymous said...

Terrence. From Wikipedia ... "Statements by President Bush, Vice President Dick Cheney, and Senate Majority Leader Bill Frist that these tax cuts effectively "paid for themselves" have been disputed by the CBPP,[7] the U.S. Treasury Department and the CBO.[8][9][10][11] Economist Paul Krugman wrote in 2007: "Supply side doctrine, which claimed without evidence that tax cuts would pay for themselves, never got any traction in the world of professional economic research, even among conservatives."[12] Since 2001, federal income tax revenues have remained below the 30-year average of 8.4% of GDP with the exception of 2007, and did not regain their year 2000 dollar peak until 2006, though reasons for regaining previous levels are not given (see chart at right)." It was not until 2006 that the tax take equaled that of 2000 and remember Bush had us fighting two wars. You picked one component of our tax laws to infer that lower rates work wonders. Do you know that GWB doubled our national debt?

Joe Cormier/jcormier2@myfairpoint.net said...


Anonymous ...
Terrence. From Wikipedia ...

Why not post the whole WIKI piece ...

"While each act has its own legislative history and effect on the tax code, the JGTRRA amplified and accelerated aspects of the EGTRRA. Since 2003, the two acts have often been spoken of together, especially in terms of analyzing their effect on the U.S. economy and population and in discussing their political ramifications. Both laws were passed using controversial Congressional reconciliation procedures.[1]"

"The Bush tax cuts had sunset provisions that made them expire at the end of 2010, since otherwise they would fall under the Byrd Rule. "

"There was and is considerable controversy over who benefited from the tax cuts and whether or not they have been effective in spurring sufficient growth. Supporters of the proposal and proponents of lower taxes say that the tax cuts increased the pace of economic recovery and job creation. Further, proponents of the cuts asserted that lowering taxes on all citizens, including the rich, would benefit all and would actually increase receipts from the wealthiest Americans as their tax rates would decline without resort to tax shelters. The Wall Street Journal editorial page states that taxes paid by millionaire households more than doubled from $136 billion in 2003 to $274 billion in 2006 because of the JGTRRA.[2]"


"Obama said, "I'm not willing to let working families across this country become collateral damage for political warfare here in Washington. And I'm not willing to let our economy slip backwards just as we're pulling ourselves out of this devastating recession. .."

"On January 1, 2013, the Bush Tax Cuts expired. However, on January 2, 2013, President Obama signed the American Taxpayer Relief Act of 2012, which reinstated many of the tax cuts, effective retroactively to January 1. The 2012 Act did not repeal the increase in the highest marginal income tax rate (from 35% to 39.6%) which had been imposed on January 1 as a result of the expiration of the Bush Tax Cuts."

http://en.wikipedia.org/wiki/Bush_tax_cuts


YADAYADAYADA ...!
Are we better off today, then ...

Convenience du jour, is the staple of politicians!

100% tax on nothing, is still nothing. A flat tax for everyone is "fairness", mathematically, and probably practically. The reason it will never happen.

Progressive taxes ... HHHMMMM ... where have we heard the term "progressives" before?


Terence C. Jatko said...

To Anon.@1:37 PM : The example cited proves that tax revenue is not static, that is, if you increase a particular tax people will not continue to pay it without changing spending patterns or business practices. Likewise, if a tax is decreased, it also encourages different behaviors. Sorry your compulsion to bash George W. Bush made you miss that. By the way, spending decisions are made by the congress, not the executive branch

Anonymous said...

If you want to see the raw data by year on the US income tax system:

http://www.irs.gov/uac/SOI-Tax-Stats-Individual-Income-Tax-Returns