The proposed budget to be voted on shortly in Concord will make significant cuts to the business profits tax and the business enterprise tax.. The business profits tax, levied on organizations with more than $50,000 in gross receipts, currently stands at 8.2 percent. The business enterprise tax, assessed on wages, interest and dividends, is 0.72 percent. The budget would lower the rates to 7.5 and 0.5 percent, respectively, beginning in 2020.
Business taxes account for nearly one quarter of state unrestricted revenue at just over $565 million.
The concept under which the cuts are being championed is that these cuts will spur new business growth which in turn will increase revenue in other areas. It is the trickle down theory of economics.
The NH Department of Revenue Administration gave its estimate of what those proposed tax cuts could cost the state: $106 million, and that was on top of the $31 million reduction expected from cuts already set to go into effect in January. Revenue in fiscal year 2021 would be 17 percent lower than today.
One only need look at the disaster this has caused in Kansas. The “Kansas Experiment” was an effort to show that running a state according to conservative economic orthodoxy would deliver jobs and growth that would in turn offset the lost tax revenue. It did not. It failed miserably. G
Revenues shrunk by hundreds of millions of dollars. to create a budget deficit of $900 million over the next two fiscal years. Kansas has tried to make up for this shortfall by raiding the state’s highway fund meant for infrastructure improvements, skimping on pension contributions, and cutting education spending. Sound familiar New Hampshire?
Here is a lesson for our NH lawmakers: After just a few years, voters learned that what they voted for was an economic mess. Having tried extreme right-wing economic policy and seen the damage it inflicted, they then changed their minds and voted for moderate lawmakers.
With reductions in NH of some federal funding, especially for Medicaid, we could be looking at a budget nightmare, all at a time when we are desperately in need of infrastructure improvements, education funding, mental health support, opioid addiction, affordable higher education and the list goes on and on.
The bottom line is that property taxes will continue to go up, young families will continue to flee and shun NH and yet our majority party in Concord turns a blind eye to our real problems and continue to " solve" problems that do not exist.
Hold on to your seats, fellow Granite Staters, it's going to be a bumpy ride.