Democrats pushing a statewide income tax say they want to solve New Hampshire’s property tax and education funding problems. But their proposal — the so-called “3-3 tax savings plan” — would impose two new statewide taxes: a 3% income tax and a $3 per $1,000 statewide property tax.
You read that right. Two brand new statewide taxes that Democrats claim will properly fund education and yet somehow lower your property taxes.
If you’re one of the roughly 80,000 New Hampshire residents who commute to Massachusetts, your effective tax rate could rise significantly depending on how the proposed credit is structured — while also paying the new statewide property tax.
Granite Staters have every reason to be skeptical.
What makes the current push especially cynical is that the same political movement now demanding an income tax helped preside over the very spending explosion they claim proves the system is broken.
For years, Democratic lawmakers and progressive activists expanded education spending while resisting reforms that might have controlled bureaucratic overhead. Now that spending has ballooned and higher property taxes have followed, they claim the solution is to give government two entirely new tax streams.
Here’s the truth: state and federal education data show the real driver of rising property taxes in New Hampshire is the relentless growth of education spending, much of it on redundant administrative overhead.
Over the past two decades, education spending in New Hampshire has skyrocketed despite sharp declines in student enrollment. Between 2001 and 2024, inflation-adjusted spending ballooned by roughly 45% while enrollment dropped by 26%. Per-student spending surged nearly 67%, placing New Hampshire among the highest-spending states in the country.
Today, New Hampshire spends more than $26,000 per student.
In other words, taxpayers are paying significantly more to educate far fewer students.
And if more spending were the answer, shouldn’t those increases have produced dramatically better results?
Instead, student outcomes have stagnated. Results from the National Assessment of Educational Progress — the nation’s report card — show New Hampshire students have lost ground in reading and math over the past two decades.
So why have property taxes continued to rise?
The answer is straightforward: school spending comprises the majority of local government budgets. In many communities, education accounts for roughly three-quarters of municipal spending. When school spending rises year after year, property taxes inevitably follow.
The real problem is not the tax structure we use to fund education or that New Hampshire spends too little on education. The problem is how the money has been spent.
While enrollment declined over the past two decades, the number of school employees increased — and it hasn’t been more teachers in the classroom. Much of the growth occurred in administrative and support roles rather than direct instruction. Instead of prioritizing teacher compensation and classroom resources, many school systems allowed layers of administrators, coordinators, consultants and other non-teaching staff to multiply.
The result is an education system that spends dramatically more money on far fewer students without delivering better outcomes.
New Hampshire’s education system is organized through more than 100 School Administrative Units, or SAUs, many maintaining their own superintendents, HR departments, finance offices, legal counsel and other administrative staff. Over time, this fragmentation has created overlapping layers of bureaucracy, driving up costs without improving classroom results.
The result is predictable. Bureaucracy grows, budgets expand and taxpayers cover the bill.
If policymakers were serious about controlling education costs and easing the burden on property taxpayers, the obvious place to start is addressing this administrative expansion. Reducing the number of SAUs, consolidating redundant administrative structures, and reducing bureaucratic overhead could lower costs while protecting what matters most — teachers, classrooms and students.
Yet income tax advocates propose something very different. Rather than confronting the spending decisions that have driven education costs upward — and student performance downward — their plan would simply give government a massive new revenue stream without fixing the underlying problem.
Granite Staters deserve excellent schools, strong local services, and responsible leadership. But creating a statewide income tax will not relieve the pressure driving property taxes. It will simply allow the same system that produced today’s spending trends — and the taxpayer burden — to grow even larger.
The evidence is clear. Spending has skyrocketed. Enrollment has fallen. Administrative staffing has ballooned. Student outcomes have stagnated. And property taxpayers have been left to pay the consequences.
Before we abandon the tax structure that has protected the New Hampshire Advantage for generations, voters should demand something simple: accountability. Policymakers need to address the spending decisions and bureaucratic growth that drove this problem in the first place.
Creating a statewide income tax will not solve this issue, it will only make it worse.
Andrew Demers is a political and public affairs professional who has worked on congressional, Senate, and presidential campaigns. He lives in Wilmot.