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My Turn: Why is Hassan criticizing bipartisan tax reforms?

It’s puzzling to hear Gov. Maggie Hassan claim that recent changes in New Hampshire’s business tax code are causing problems with the state budget. Not only were the reforms of the past few years approved with overwhelming bipartisan support, they were fully accounted for in the budget.

During last year’s budget debate, Senate Republicans insisted on revenue projections more conservative than the governor’s optimistic estimates. It’s a good thing we did. Fiscal 2014 revenues came in just $3.1 million higher than our forecast.

As I conclude my time as chairman of the Senate Ways and Means Committee, I’d like to review why Republicans and Democrats joined forces to reform New Hampshire’s businesses taxes to improve our economy, and why we shouldn’t reverse this progress.

Internet tax

Since 1998, Congress imposed a moratorium on new state and local taxes on internet access. Despite this federal law, the New Hampshire Department of Revenue Administration began applying the Communications Services Tax to internet access charges without Legislative approval.

In 2012, the Legislature corrected this bureaucratic overreach by passing HB 1418, which clarified that the Communications Services Tax does not apply to internet access.

The Senate approved the bill 23-0, and the House passed it 244-46.

BET threshold

HB 1418 also included a provision to provide tax relief to New Hampshire’s smallest businesses. By increasing the threshold for the Business Enterprise Tax and adjusting it for inflation, we insured that rising prices wouldn’t slowly force more and more small businesses into the BET. Avoiding “bracket creep” was a necessary and overdue reform to New Hampshire’s business tax code, and received wide bipartisan support.

NOL Carryforward

One area where New Hampshire was losing ground to neighboring states was the ability of new business to write off their start-up losses against future profits, known as Net Operating Loss Carryforward. New Hampshire only allowed businesses to use $1 million in NOL to offset their first few profitable years, which was one of the very lowest in the nation.

In 2012, we approved HB 242, which increased NOL carryforward to $10 million. This encourages struggling start-ups just as they are taking off. The House approved the bill 259-89, the Senate approved it unanimously, and Gov. John Lynch signed it into law.

Interest and Dividends

In 2012, the Legislature also updated the Interest and Dividends Tax. The tax had been applied when trusts earned interest on their investments, even if no one in New Hampshire actually received any income that year.

SB 326 amended the law so that the tax now applies when interest income is actually distributed to a beneficiary. The Senate voted 23-0 to override Lynch’s veto of SB 326, and the House overrode him by a vote of 312-18.

Hassan seeks to blame this small change for a $16 million drop in I&D revenue last year, but trusts only account for $5 million a year in revenues. The real source of the dip was the fiscal cliff standoff in Washington, which temporarily increased federal taxes on dividends. This discouraged companies to hand out dividends last year, cutting into New Hampshire I&D tax base.

R&D Tax Credit

Last year, I sponsored SB 1 to double the Research and Development Tax Credit and make it permanent. It passed the Senate unanimously and the House 342-7.

Hassan lauded the bill when she signed it into law.

All of these tax reforms were passed with broad, bipartisan support. The revenue impact of these reforms, if any, was factored into the revenue forecasts included in the FY 2014-15 budget that the governor praised. So why now is Hassan falsely claiming that these tax changes are causing problems with the budget?

The real problem facing the New Hampshire budget is spending. Revenue forecasts were right on target for FY 2014, which ended in June. But we still don’t know whether spending stayed within the budget.

The governor has been warning since May that state departments might exceed their authorized spending, but she has declined to share that data with the Legislature and the public.

If New Hampshire is facing a budget deficit, we need to see the spending data as soon as possible. We don’t need to reverse the bipartisan business tax reforms that this past Legislature has approved.

(Sen. Bob Odell, a New London Republican, is chairman of the Senate Ways and Means Committee, and is retiring after six terms in the state Senate.)

Legacy Comments13

It is difficult to believe that no one is asking the question(s): What impact does all the corporate income tax avoidance by multinational corporations have on New Hampshire's Business Profits Tax revenues? And what are our government officials doing about it? US-based multinationals want to be foreign-based multinationals in order to avoid federal and state income taxes. Who are many of NH's largest employers? Foreign-based multinational corporations. Is that because NH adopted water's edge combined reporting in 1986? Who stated the following: "We point out that the water's edge method was adopted for the benefit of foreign businesses. Prior to 1986, New Hampshire utilized worldwide combined reporting, in which the net income of all members of the unitary group, domestic and foreign, was included in the tax base. In 1986, the legislature adopted the water's edge method, eliminating overseas business organizations from subjection to the business profits tax." The NH Supreme Court in their unanimous 1999 Caterpillar decision. Why would our legislature adopt a method of taxation that favors foreign businesses over domestic businesses?? Can someone at the Monitor answer that question?

GAS TAX HIKE The Senate Ways and Means Committee voted, 4-1, to support the bill, with Senate President Chuck Morse, R-Salem, casting the sole no vote. Among Upper Valley lawmakers, state Sens. Bob Odell, R-New London, and David Pierce, D-Lebanon, voted for the gas tax increase. State Sen. Jeanie Forrester, R-Meredith, was opposed. Thanks alot ODELL, you have no credibility....

Yeah, that gas tax is really killing me. I paid 3.32 yesterday in Northwood, according to the Nashua Telegraph, gas prices were 14 cents higher last Labor Day without a tax hike. And maybe we will be able to have less pot holes this winter.

LF, If Odell did anything wrong, it's by not holding out for a 10¢ gas tax hike. The 4¢ hike appears to have had zero negative impact. Moreover, if six more cents per gallon would balance the budget, and shut up the casino-mongers, then I say 'do it'.

only a LIDV does not know that taxing is NOT NOT NOT our problem - SPENDING IS THE PROBLEM. Taxation so far in NH is 0.1% over budget - it is the democrats overspending that is killing us.

"Fenwick" is Rep. Laurie Sanborn's maiden name. I do not know if this is Rep. Sanborn's Concord Monitor comment handle, however: perhaps someone else hijacked this handle. If this is Rep. Sanborn, she is not exactly being the epitome of civility by saying that her colleague (who is also one of her spouse's colleagues) has "no credibility." In all fairness, however, she is known for her tireless opposition to raising any existing taxes or fees--- and she is even more tireless in her opposition to creating any new taxes or fees. That means she is opposed to any attempts to reform our state's tax system, since you can't reform an antiquated tax system just by cutting existing taxes and fees. (BTW, "TimothyHorrigan" is indeed rep. Timothy Horrigan's Concord Monitor comment handle.)

Nice conjecture and attempted character assassination. But epic fail on your part. Laurie Sanborn, if you will has quite a stable and good background. You will not see her driving a shuttle bus or holding down 22 jobs in 23 years with degree after degree not being utilized. We know who you are, Timothy and to your point, an income tax is crippling unless we limit and restrict property taxes. If we were going to pass a tax a sales tax excluding pharmacy items, clothing and food. All towns would restrict their local spending to 1% or less increase per year without 2/3 vote overriding it. And all taxes collected would be spent on education only. Would you agree to that?

Hmm...interesting scenario, TH. However, I pray it is not the case, because this Fenwick commenter is a "loose cannon" by any definition, with a style entirely unbecoming of an elected representative of the people (any people). Plus, it would be foolish of Rep Sanborn to conceal her identity in such a forum, for the inevitable negative fallout, once revealed. Not knowing Laurie Sanborn, I'll have to give her the benefit of all doubt that Fenwick is someone else. Hope so, for Sanborn's sake, anyway.

Probably not her, TH. Today is Rep Laurie Sanborn's birthday. Be kind of sad if she's spending it on Talkback...with all due respect to the CM.

I had originally thought that too, but Laurie Fenwick said she is of African American heritage and I don't know if Laurie Sanborn is. But if it is her and I was an opponent I would have a field day printing some her postings. They show utter contempt for most of her constituents, unless they are all wealthy like her. She has called NH citizens "rats" for needing health care.

There is NO ONE in NH with the name Laurie Fenwick and your conjecture is not only rude but it is ignorant. You are so hateful but you preach otherwise. Both you and Horrigan should know better.

"O holier than thou", after the posts I have read from you that really makes me laugh. If it is not her, what is the problem? Don't you agree with everything LF writes and have no problem with LS saying it?

$$$$$ 102.1 MILLION DEFICIT is being hidden by Hassan. Revenue is on target. That is the recent projection from the Bartlett Inst. Freedom of Press was created to root out public corruption. Seems this lousy RAG not only cant do any investigative reporting - they cant even reprint the truth when it hurts their biased liberal slant Hassan must go!

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