Fed up with your local property taxes? If so, you should check out what’s going on at the state level, because that’s why your property taxes are so high.
On Tax Day last month, the Free State-dominated Republicans scheduled public hearings on a constitutional amendment (CACR 12) that would effectively ban a state income tax. In fact, the amendment would require a super-majority two-thirds vote in both the House and Senate and two-thirds in a statewide referendum to pass “any new tax on personal income, earned or unearned, sales or use, capital gains, inheritance, estate, or death, or any similar broad-based tax scheme.”
It doesn’t take a genius to tell who benefits from such an amendment. It would essentially freeze the huge tax advantage of the very wealthy into perpetuity. It’s also clear who will pay for the amendment: lower and middle-income working folks whose property taxes will continue to rise.
This story goes back more than 50 years to the infamous William Loeb, the Union Leader editor whose brain child was New Hampshire’s “Pledge” in which candidates for state office are pressured to commit to no statewide income or sales tax.
Republicans have reflexively repeated their mantra: “No income tax, no sales tax, not now, not ever,” ever since the Pledge became a thing. Statewide Democratic leaders have simply fallen in line, whether because they fear being painted as “tax and spend Democrats,” or because they hope to compete for campaign support from the wealthiest sectors.
Thus, in response to the House hearing, Gov. Ayotte’s press release repeated the refrain, “No income tax — not now, not ever!” And while House Democratic Leader Alexis Simpson criticized the hearing as a “gimmick,” she assured the public that “An income tax has not and will not be considered.”
The notion of no statewide income tax would seem to suggest that New Hampshire is the home of low taxes, what House Majority Leader and Free Stater Jason Osborne likes to claim is the “New Hampshire Advantage.” But if you’re a working or middle-class person, you don’t share in that so-called advantage.
New Hampshire has the 18th most regressive state and local tax systems in the country, meaning state taxes do not reflect people’s ability to pay. According to a study by the Institute on Taxation and Economic Policy, the top 1% of income earners in New Hamsphire (annual incomes above $721,000) pay state and local taxes at a rate less than a third of the rate paid by the states’ poorest working families.
Besides lower- or middle-income folks burdened with high property taxes, New Hampshire’s public school students are the other group victimized by this system. The past few years anti-property tax resentments have boiled over at annual school board meetings. Many proposed school budgets have been rejected across the state, and many districts have been forced to make anti-educational cutbacks to teaching and support staffing.
Not surprisingly, New Hampshire ranks dead last of all 50 states in the statewide contribution to education — a big reason the state relies more heavily on property taxes for education than all but one state. Educational opportunity in New Hampshire is still tied to local property wealth, despite four successive state Supreme Court rulings that this violates the state constitution.
Why, then, the sudden push to adopt a constitutional amendment banning a state income tax?
On March 3, the group called “Cut Our Property Taxes” proposed a statewide 3-3 tax reform that would reduce total state and local taxes for about 80% of New Hampshire residents. The 3% income tax includes generous deductions for up to $100,000 income for a family of four, which shifts the burden to high income folks. The $3 statewide property tax provides homestead owners with a $250,000 exemption, and provides renters with an equivalent $750 tax credit. The exemption shifts more of the property tax burden onto those who don’t pay the income tax, namely out-of-state second home owners and corporate properties.
State revenues from the plan would effectively replace local school tax revenues, thereby stabilizing school funding. That’s a win-win idea.
Not surprisingly, political leaders panicked at the thought of a fairer tax system. They responded immediately. Gov. Ayotte repeated the familiar “not now, not ever” refrain while Jason Osborne put it bluntly, “Our answer is still HELL NO!”
Democratic leaders like Alexis Simpson echoed these sentiments, and Democratic candidate for Governor Cinde Warmington asserted, “No income tax. No sales tax. No raising taxes on working families.”
Again, it sounds like these good people are protecting you from high taxes. Actually, the opposite is true, which is why this is a con job.
The 3-3 Tax Savings Plan offers a calculator in which all residents can find out what would happen to their taxes under the plan. Check it out at nhtaxsavingscalculator.org.
At the hearing, Republican Daryl Abbas claimed an income tax would not lower property taxes. Democratic committee member Susan Elsberger responded that she had used the calculator and her property taxes would go down $2,500. Abbas insisted property taxes would go up without providing any evidence for his claim.
That, in a nutshell, is the difference between a con job about “low taxes” and the real effects of a progressive tax reform proposal.
While the Republican Party is likely to continue benefitting the wealthiest residents of New Hampshire, it’s time for new leadership of the Democratic Party, leadership that will truly work to reduce your property taxes while protecting our public schools.
Ted Morgan is a retired political science professor and member of the “Cut Our Property Taxes” group.