The NH Tax System Unfairly Takes More From Middle and Low Income Families

We have all heard the debate, income tax or no income tax. This debate dominated the headlines durning the NH Governor race.  Maggie Hassan vowed to oppose an income or sales tax, while Jackie Cilley would not take the ‘pledge’ to oppose the taxes.

While I fully supported Maggie Hassan in her eventual win as New Hampshire’s Governor, I was a fan of Jackie Cilley’s tax plan.  ( I am sure the NH GOP are going to have a field day with that.)

The evidence is clear, that NH needs to increase revenue if we want to restore some of the massive cuts to our schools, our Health & Human Services projects, UNH funding and  more.

The problem is that right now, New Hampshire’s tax system favors the wealthy by taking more from the lower income families.  This is called a regressive tax structure.  The NH Fiscal Policy Institute talked about this recently.  In fact the overall tax rate of the top 20% is just over half of the bottom 20%.  The top 5% are just under half of the bottom 20%. rates, and the top 1% pay less than a quarter of the bottom 20%. rates.

NH Taxes

NH Taxes

Think about it this way. You own (or rent) a home and the property taxes are $4,000 per year.  I know, unrealistic for New Hampshire, but play along.  Your taxes are $4,000 dollars, and you make $40,000 per year.  Your property taxes would be 10% of your yearly wages.  Now if you made $80,000, it would be 5%.  The higher your income bracket the less the percentage of your income it effects.

So what do we do? First is should be known that NH is not alone, and we are far from the worst when it comes to taxing the poor.  With all that said, we are not really that far off from the national average either.

New Hampshire is about 3% lower than the average.  This would is also one of the reasons New Hampshire has the highest number of millionaires per capita.  This regressive tax structure does not help our state when it comes to creating budgets.   So when the town raises taxes, like many in New Hampshire did, the lowest incomes bear the brunt of the pain.

How can we fix this problem?  New Hampshire politicos talk a lot about helping the middle class, and protecting the lower income families.  If they truly wanted to help the low income families they would be pushing for a completely new tax structure.  Without an income tax you cannot balance the regressive tax structure with a progressive income tax. This way when all is said and done the share of tax relative to  income would be equal and nobody can complain they are being treated unfairly.  It would end the debate that the 1% of New Hampshire is benefiting while the 99% are being punished.

SONH 2013 Revenue Plan Property and Business taxes

A revised tax system would have a significant impact on our small business community.  The GOP in the House are always complaining that taxes on businesses are too high.  Look at this chart of the New Hampshire revenue stream.  An income based tax would allow New Hampshire to drastically reduce the business profits tax and enterprise tax.  This would be encouraging for businesses to expand and would strengthen the ‘New Hampshire Advantage’ for businesses.

 

Yet this is not happening in New Hampshire because legislators took pledges, and secret vows, to oppose an income tax because it make New Hampshire a better place.  WRONG! It makes New Hampshire a better place for wealthy people to live.  This is why New Hampshire is loosing young people by the thousands every year.  They cannot afford to live here and pay the taxes on the pay they are making.  At least in Massachusetts they will get better pay before they are hit with an income tax.  Even with the Massachusetts income tax added in they only pay about 1.4% higher for the bottom 20% but significantly more for the top 1%.

I would also like to point out that Massachusetts or ‘Tax-a-chusetts’ as many Granite Staters like to call it is still less than the national average.  Even Massachusetts taxes are regressive, better than NH, but regressive.

If New Hampshire is serious about helping the low to moderate income families in New Hampshire then talking about a progressive income tax should be on the table.  We want to build a tax structure that effects everyone equally and does not punish people for making too much, or those struggling to get by.

Like I said the radical right and even some of the moderate middle are going to hate me for saying this.  We need to institute some type of income tax to balance the pain of taxes.  This will also help to lower our property taxes, making rent and home ownership costs go down, encouraging more younger people to buy homes here.  It will grow our state budget so we can finish the projects we have been talking about for decades.  We can make New Hampshire a better place to live than it already is.

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About Matt Murray

Matt Murray is the creator and an author on the NH Labor News. He is a union member and advocate for labor and progressive politics. He also works with other unions and members to help spread our message. Follow him on Twitter @NHLabor_News
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