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Editorial: Candidates’ tax-cut plans wrongheaded

George H.W. Bush called the notion that cutting taxes would increase economic activity, thus creating jobs and increasing federal revenue, “vodoo economics.”

So-called supply-side economics didn’t pan out for President Ronald Reagan, who increased taxes. As a theory it’s largely been discredited, but its something-for-nothing allure remains so strong that the idea refuses to die.

Three decades later, supply-side notions such as those that underlie the tax plans of New Hampshire Republican gubernatorial candidates Andrew Hemingway and Walt Havenstein should more rightly be called zombie economics. They are the walking dead, yet still capable of doing harm.

Havenstein, if elected, would push to lower the state’s Business Profits Tax from 8.5 percent to 7.4 percent, something that he magically believes would create 25,000 new jobs. He offers no evidence to support that belief, and history suggests it’s misplaced.

Analyses by the national Economic Policy Institute, the Center on Budget and Policy Priorities and the New Hampshire Fiscal Policy Institute, among many others, show that cutting corporate taxes has little or no effect on a business’s decision to relocate, expand or hire more workers.

Hemingway’s far more radical plan calls for eliminating the BPT and the Medicaid Enhancement Tax on hospitals while reducing the Interest and Dividends Tax from 5 percent to 2.3 percent.

In theory, he would offset the lost revenue from those tax cuts by increasing the Business Enterprise Tax, which is akin to a payroll tax, from 0.75 percent to 2 percent while extending it to cover nonprofit institutions and city and town payrolls. An amazing notion: Tax government to pay for government. Why didn’t anyone think of that before?

Taxing nonprofits and society gets a bit less of what those nonprofits do, such as provide health care and education, care for the poor and support the arts. That isn’t going to create a more liveable state. Taxing government payroll and society will get fewer services or higher property taxes in a state that already has some of the highest property tax rates in the nation.

According to research cited by the Fiscal Policy Institute, business taxes in New Hampshire are already lower than in most states. And in every state, business taxes make up only a small component of business expenses and thus have limited influence on business decision-making. Other factors – an educated workforce, good schools, quality of life, state of the infrastructure, access to markets and the like – are far more important.

What the tax cuts proposed by both candidates would do is reduce the state’s ability to pay for the things that make New Hampshire attractive to employers and the young families the state wants to attract, among them good schools, safe roads, well-kept parks, good public services, a clean and beautiful environment, and affordable higher education.

The states of Kansas and Ohio, at the behest of Republican governors, fell for the supply-side fool’s gold and cut taxes deeply in 2012.

Ohio didn’t gain jobs, it lost them. The cuts in Kansas created an enormous deficit, starved schools and public services of funding, and kept the state from coming out of the recession the way neighboring states did. The number of jobs in Kansas increased by 3.5 percent between 2011 and 2014, but the growth rate was less than half that of neighboring states that didn’t cut taxes.

The tax cuts proposed by Hemingway and Havenstein would take the state backward, not forward.

Legacy Comments55

We hear a lot of talk about civil discussion, yet we often witness those on the left name calling when anyone disagrees with them. They are all about stopping bullying, yet they practice it with name calling. I guess if you have tunnel vision, it can be annoying when someone has another view. Instead of name calling, prove why someone that disagrees with you is wrong. Otherwise, you are no different than the bully on the playground who name calls.

You hit it, Bunny Wabbit! I find it difficult to understand the mind set the leftists who are all about tolerance, but are not willing to let others have a differing opinion from theirs.

I got this one, CY. Hey, crank...you have an 'R' on that keyboard? Then, use it! heh-heh-heh...

Funny, I get lambasted with all sorts of names on a regular basis: "commie", "socialist", "lidv", "unpatriotic", "subversive", "leftist", "unAmerican",etc. But when I get tired of the constant repetition of inaccurate drivel accompanied by name-calling from two of the Carpers in particular, and call them out for what they are: "lying liars", AND provide the documentation to "prove why...", I'm the one who's "intolerant". We're all entitled to our opinions, it would just be nice if there were some rational basis to the ones that get repeated over and over and over. And there isn't. It truly is "lying".

Bruce, this is an "opinion" forum, not a "copy and paste" forum for those who want to continually push an ideology and agenda from one sided sites. You are referring to me and have called me a liar on numerous occasions. Let's be honest, you would be happy if this forum just validated ONLY your views and ideals. It IS rational to express opinions that back up long held beliefs, you seem to be irritated that people challenge the 'fundamental change' that you propose. You cherry pick statistics to match your beliefs and agenda and you dismiss others without thinking about them. You ignore the facts on the ground and instead quote statistics. My belief is that you are so Hell bent on seeing your sixties radical reality come to life that you have become unhinged. Another thing, your name calling tops that of others in this forum. But rant on Bruce, your over the top extreme expression of "my belief is the only truth", it simply convinces intelligent people to dismiss you.

you yourself declared that you are a socialist right here in this forum - How is that name calling?

CUT SPENDING, CUT SPENDING, CUT SPENDING. What a bunch of doo doo. The one thing Reagan definitely didn't do was cut spending. Even Ford and Carter cut government spending more that Reagan. That is your god, Bpr and Itsa with feet of clay.

Another on a long list of revisionist history from the chief LIDV. NObama has months with greater deficits than Reagan's ANNUAL deficits. What Reagan spent to WIN the cold war was a bargain at 2X the price

When Bush Jr took office, we had a budget surplus and during those 8 years he was in office , the budget went from 236 billion surplus to a 1413 billion deficit. Since Obama has been in office the deficit thus far has been lowered by 492 billion and decreasing. But here is the key, you are comparing apples to oranges. You need to compare Obama's record in this area to Bush Jr's as he was the main reason the deficit ballooned! So quit cherry picking the data will you. Ref http://www.davemanuel.com/history-of-deficits-and-surpluses-in-the-united-states.php

The only guy in recent history with a balanced budget (meaning non-deficit) was Clinton, but maybe he was too busy entertaining interns to spend any money. Can't hold that against him; he is married to Hillary. OTOH, I'd be less apt to hit the mute button when Hillary came on than O'Bozo.

In 1978 I moved to Fairfax County Virgina for a job. Back then it was back roads and your biggest worry was deers in rut and black ice. The state of Virgina has a sales tax and an income tax So the burdon is spread out. Now it is smaller than Merrimac County and yet Fairfax was the first county in the United States to reach a six-figure median household income and has the second-highest median household income of any local jurisdiction in the United States after neighbor Loudoun County. The county is also home to ten Fortune 500 companies, including three with Falls Church addresses.Loudoun has a full-fledged service economy. It is home to world headquarters for several Internet-related and high tech companies, including Verizon Business, Telos Corporation, Orbital Sciences Corporation, and Paxfire. Like Fairfax County's Dulles Corridor, Loudoun County has economically benefited from the existence of Washington Dulles International Airport, the majority of which is located in the county along its border with Fairfax. Not having a broad tax to pay bills is what hurts NH more than any other thing.

HUH...go figure...you dont suppose being right next to the,,,NOOOOO...cant be!!

(refrozen)cavman35, Tough comparison if ya ask me. Fairfax County is NOT smaller than Merrimack County; not where population is concerned. On the contrary, it is nearly ten (10) times LARGER. In fact, Fairfax County's 1.1mil is nearly equals that of the entire state of NH (1.3mil). Plus, Washington DC is right next door. All that aside, I think a general Sales Tax could hurt New Hampshire's tourism industry (we're already hitting them up for Rooms & Meals). But it may be time for an Income Tax in the Granite State. No gubernatorial candidate would get elected on a platform of both taxes (perhaps not even with one tax). I don't know the overall numbers, but I was wondering if a 1% or 2% State Income Tax, with the first $30K exempted, might work? The latter would provide some protection for the average working stiff, who is barely scraping by. I can just hear the rich crying in their route 1A "cottages" now, but I feel the exempted amount would be fair. The question is, would it bring in enough revenue? I'll duck-and-cover, now.

The Monitor experts miss one point. We need to CUT SPENDING and stop making government the end all and be all for every perceived inequity or need.

The idea that government spending is inherently harmful to the economy is an outmoded one dating from the era when the economy was operating near peak capacity.

Incorrect, it is called Keynesian economics which have failed before and will fail again. Only private sector economics can build and maintain GDP and since GDP determines overall prosperity, your progressive pipe dream is just that, a pipe dream.

ITSA is mostly correct - Keynesian economics is already a failure QUOTE: "Brad DeLong, one of the most prestigious Keynesians, a professor at Berkeley and former deputy assistant secretary of the Treasury under Clinton, says that he agrees. It really is a depression."

How does your ripped-from-context quote invalidate Keynesian economics?

when you cant debate the facts a liberal pulls the "context" card - the sign of a week mind.

So is your mind YOUR mind weak daily or weekly?

Funny, the economic history of the Great Depression and how we emerged from it doesn't match that claim at all.

your socialist slip is showing

Govt spending is harmful to the economy if it goes on too long. The Great Depression is an example of govt being involved for too long. A smart govt helps, but also knows when to allow the economy to right itself naturally. Till that happens, growth will stay stagnated. And we will also see more companies leave the US if we keep mandating business. And I would guess we will also see a decline in other countries investing in the US. If you champion bigger govt, than it is understandable that you do not understand how the economy works. The economy is capable of fixing itself, but if we have more govt involvement, that will not happen.

Move to Kansas Itsa. The Conservative utopian experiment of getting rid or lowering the taxes is bankrupting the State. They have had a full slate Republican House, Senate, and Governor since 2010. You would fit right in.

I have lived here my whole life.....not moving but anything I can do to help you with a move, let me know.

The Kansas legislature and Governor since 2010 have followed everything you are a proponent of. Just look at the sorry state of affairs there now. You really need to move there and be with your conservative cronies. This way you can shout for all to hear how great these principles are as the state goes down the crapper! Oh and by the way, I too was born here and with the exception of my 20 year detour in the USN, I have always lived here.

20 years swabbing the deck. I imagine that the fumes from the mop water has something to due with the way that you think. It is not about being a conservative, it is about common sense principles established by our founders. They never envisioned a day when "government" is so engrained in every single aspect of our lives.....something that progressives champion. We can do more with the taxes we currently pay if we stopped creating programs to address every perceived inequity in the world. Take it easy swabbie, I sure that you do.

If your a political common sense conservative, then I'm the Pope. You have no more political common sense than a 4 year old. Please do us a favor and move to your Kansas utopia. And you my friend have not earned the right to call me a swabbie. Chances are you couldn't cut the mustard in any branch of the US Armed Services!

Thank you! You just showed us a piece of your demeanor and character. You might be a bit surprised about cutting the mustard sailor. Most people in the armed services seldom bring it up, much less brag about it to make a point and win an argument. I guess that you didn't get that message. You resemble the devil doc who pontificates here regularly. Buck up swabbie!

You opened the door! I just walked on through. Only those who have walked in the shoes of a sailor, airman, marine, or soldier can call someone in those services their particular knick name unless they have familiar ties with that particular service member. You my friend do not fit in any of those categories. Oh and by the way, should the shoe fit, then wear it! As I've stated before, you can take your overt conservative ways and move to your Kansan utopia. I also believe right not Wisconsin is going in the same direction as Kansas. So you now have two places to go and shout how well your conservative principles work!

If you believe this editorial HOKUM then you are definitely a LIDV. The Burger King move is absolute proof of the Efficacy of the Laffer Curve. TAXING is not our problem - SPENDING is - Hassan is hiding her $$$$ 102.1 MILLION DEFICIT until after the election. The CM should write about that........ not print HOKUM

Didn't pan out??? Sometimes I wonder what the heck it is that I pay for in this paper...Someone tell Bill Clinton what Reagan did...didn't pan out. Heres what didnt pan out..U.S. Household Net Worth 2007- 2013 Top 1% Up 1.9% Next 9 % Up 3.4% Next 15% Down 0.5% Next 25% Down 16.7% Bottom 50% Down 44.2%

Your numbers prove the point that trickle down economics is Voodoo economics. Lower tax rates as the taxes were not raised in this time period, but were held at the Bush Jr level, shows that the upper 10% gained in net worth while all the rest lost.

not a stitch of facts in that comment of Mrs gsec92 - 100% pure democrat rhetoric blather

Please enlighten me to what part of what I said is wrong!

The Economic principle of the Laffer Curve was again proven correct in the Burger King move - LIDV's ......sheeeeesh

Instead of just brushing away my question, please answer it.

"Not a stitch of facts", I have yet to one of your 7000 posts that show a shred of intelligence. I'm sorry but in my opinion you would know a fact if it jumped up and bite you, shook you by the shoulders then started over. You believe what you want whether it's based in fact or not. The more someone disproves your tireless posts, the more you stand by them. Raygun started this whole mess with his trickle down BS and fools still buy it. I used to find your anti-Bow Town Gov rants amusing, but some people just never get it and you are their poster child. Before this gets reported as a character attack, just know - you have no character to attack. See you in the funnies, this forum has grown weary and I am exiting it as this paper has somehow lost it's appeal to me. Good bye, CM.

Thanks for the placement, I was reply to that braintrust PBR.

see ya!

GC, before you depart, try ignoring the trolls and conversing with the rest of us. Or just take a week or two off and come back refreshed.

Beany, what you are saying is that anyone who disagrees with your viewpoint is a troll. There are few people less tolerant than progressives even though they preach tolerance at every turn. You folks want to ONLY deal with your own ideas and anyone who posts something contrary is a "troll". Precious!

"Don't feed the trolls" is good advice. As much as possible, ignore his childish and often foolish rants, which have no other purpose than to provoke, and call into question his sanity. So, GC, take a break if you must, as BeancounterNH suggests, but the site's dialogue benefits from reasonable, rational comments, which are read, if not always responded to. Here's a vote for a return to some of the features of the old site--which allowed one to star good posts.

WOW! You certainly are sitting pretty tall on that high horse. To you Bruce, any ideas expressed which question your firm and unmovable beliefs are "foolish rants" and the other person, as you posted is obviously "insane". I see little "reasonable" or "rational" comments coming from your posts, in fact most are copy and paste from sites that I doubt you truly understand. As far as the old system is concerned, when one point of view posted, it got more thumbs up if the other side posted it got more thumbs up. I think that where most of us part from you is that you do support a "fundamental change" to our country and society. Most of us do not support that kind of radical Left turn. Although it might make you happier to have an echo chamber of like views, the population does not necessarily reflect your views. Yes, I know, you are closer than ever to attaining your 60's Utopia where political correctness and control of the populace where everything from how much you can drive and what you should drive to the government telling you what you can and can't eat reigns supreme. Trust me, there are millions of those "trolls" as you call them who will "provoke" you. People are fed up and they are fed up with folks who think as you do. The fact that it aggravates you so much questions who is childish and foolish.

I don't think it takes long for most readers to ascertain which posts and which posters are "childish and foolish".

Bruce, you are way too hard on yourself.

Thanks, Bruce, I couldn't have said it better. I value the intelligent conversations in this forum, and consider you, GC and several others to be assets, whether I agree with you or not. There are a few trolls that I try (sometimes with success, sometimes not) to ignore. Sometimes they become so annoying to me that I have to walk away for awhile before I sink to their level. I do miss that "thumbs-up" button from the old days. It really helped to see just where the trolls rated in the eyes of most posters. GC, you're not alone here. You have friends. Take a break if you need to, but do come back when you've recharged your batteries.

LOLOL. Translation of what you were really thinking: "I wish that only people who thought as I do posted here, I mean, this is a liberal newspaper and those people who are conservative should find somewhere else to post, like the Union Leader. My views are superior and they are thoughtful, not like those "trolls" who are so uninformed and so ignorant. I am high above them, I won't 'sink to their level', I mean, I am enlightened and superior and 'intelligent' unlike those who challenge me. The only 'assets' on this forum are those who think like I do. But I am so tolerant, inclusive and diverse". Yes that is you and an typical progressive.

perfect reply...you won the internet for today

Sorry, Bean, but I have to agree with ItsaRepublic on this point; a troll is in the eye of the beholder. Or, one poster's troll is another poster's treasure. Any rating system for comments posted would be heavily biased toward one's party affiliation, just as the reviews/replies are in here now. Personally, I can't see where that would help matters any.

Larry, you make a good point on the rating system. Folks could vote a comment up or down for all sorts of reasons, only one of which is perceived trollishness. I will retract that part of my post.

How big of you.....a troll is in the eye of the beholder. I am beholding you in that way now.

Itsa, You can employ the tweezers & magnifying glass to "behold" anything you can locate on your person; I really don't give a rodent's derriere. The incessant flow of self-righteous posts that emit from your pompous-ass is of little concern to me.

trollishness?

Proof positive, there is a "GOD".

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