When you’ve spent as much time in the New Hampshire legislature as I have, you are used to seeing solutions proposed to problems yet to arise. This session is no exception. Currently, Senate Bills One and Two are pending in the Senate championed by some as needed to enhance our business climate.
While these bills would modestly reduce taxes on a very small percentage of New Hampshire’s businesses, they would blow a major hole in the state’s budget for the next two years – a budget that is already significantly challenged – and limit our ability to provide the vital investments that businesses have told us they want and need in order to continue to thrive in our state.
Proponents of these bills believe that our current business climate – routinely ranked in the top ten in the country for attracting, growing, and creating new thriving businesses – needs fixing. They think that the only improvement in that climate our state government can offer is a reduction in taxes businesses pay. Yet any survey of the way that site selection professionals chose locations for new facilities makes clear that, while taxation levels are a consideration, they are an increasingly minor one.
Area Development, a leading trade publication for industrial real estate professionals for over fifty years, published a comprehensive 10-part series in the fourth quarter of 2014 based on their 28th annual survey of corporate executives.The results will not surprise anyone who has worked with economic development professionals, business leaders, and industrial realtors. Taxes are important, but other factors have long-since eclipsed tax rates as the leading priorities for businesses looking to expand.
The top six factors cited in the Area Development survey all reflect priorities that Gov. Hassan stressed in her inaugural address and that Democrats agree need to be adequately funded in order to actually improve our business climate. These include a more market-ready workforce by making higher education more flexible and more affordable (Factors 1 and 3), improved transportation infrastructure (Factor 2), and a “robust” information and communications technology infrastructure (Factor 5.) Factors 4 and 6 both concern the price and cost of physical plants and turnkey facilities, variables that the State of New Hampshire could help address if more financial resources from the state were allocated to help communities lower their property taxes.
The survey goes on to address the impact of state and local taxation, citing it as the seventh most important factor. The discussion of the impact of taxes is mitigated, however, by the understanding that states with extremely low taxes often cannot supply crucial services. Area Development quotes Larry Gigerich, managing director of the site selection firm Ginovus:
“We talk to C-suite people who say that we’ve hit a tipping point on corporate taxes now because of examples like Kansas. They’re saying that there are basic services that governments provide, and if states cut taxes too much, they don’t have the revenue to do it. They want states to be able to pay for services and infrastructure and workforce development.” (Emphasis mine) 
Meanwhile, New Hampshire continues to attract new businesses like Albany International and Revolution Energy, both here on the Seacoast, as well as grow existing ones, both large and small. The right-wing Tax Foundation, who lauds Rep. Paul Ryan (R-WI) and Gov. Mike Pence (R-IN) on their blog’s front page, rates New Hampshire seventh in their annual State Business Tax Climate Index for 2015, continuing its long run in the top ten states for business climate based on taxes. The Tax Foundation has consistently found New Hampshire to have one of the most attractive tax climates in the US, notably throughout the terms of Democratic governors Shaheen, Lynch, and Hassan.
It is important to note the number of companies that would benefit from SB1 and SB2. Three out of every four businesses in New Hampshire (75.7%) currently pay no taxes under the business profit tax (BPT) that would be cut under SB1 while almost half (43.9%) of New Hampshire businesses pay no taxes under the business enterprise tax (BET) that would be cut by SB2. Another 10.9% pay less than $1000 and would surely be unaffected by the SB1 cuts. Another one in three businesses pay less than $1000 under the BET and would see no benefit in the reduction proposed by SB 2. Altogether, fewer than 17,000 businesses out of the more than 120,000 businesses registered in the state paid more than $1000 dollars in business taxes in 2011 and might see some tax relief. 
Clearly the impact on the business climate of tax cuts proposed in SB1 and SB2 would be almost de minimus, while the loss of revenue to the general fund, projected to be $78,008,824 over the next two years, would be significant to an already cash strapped budget. This would mean less support for higher education and local schools, including school building aid, fewer miles of roads paved and red lined bridges repaired to name but a few of the services so essential to a healthy business climate and a thriving economy. Creating a well-educated and skilled workforce, investing in a well maintained and modern infrastructure, including available and effective broad-band and cloud service and ensuring a safe and healthy environment will have a far more positive impact on our business climate than any small tax cut offered by SB1 and 2 – a tax solution to a potential problem that, in reality, despite the rhetoric, will only affect a very small number of large and successful businesses. More importantly, we should listen to business professionals and prioritize our economic development strategies accordingly.
 ibid, note 8
 http://www.revenue.nh.gov/publications/reports/documents/ar-2014.pdf (see alsohttp://www.revenue.nh.gov/publications/presentations/documents/senate-ways-means-present-2015.pdf for recent revenue history of BET, BPT.
 Fiscal Notes for SB1 and SB2 http://www.gencourt.state.nh.us/bill_status/bill_status.aspx?lsr=189&sy=2015&sortoption=&txtsessionyear=2015&txtbillnumber=SB1
These are the stakes…To make a world in which all of God’s children can live, or to go into the dark. We must either love each other, or we must die. LBJ, 1964