OUR ENVIRONMENT NEEDS MORE LOCAL REPORTING

The Concord Monitor is launching its Environmental Reporting Lab, a long-term effort to better inform the community about the New Hampshire environment. To launch phase 1 of this effort, we need your help. The money raised will go toward hiring a full-time environmental reporter.

Please consider donating to this effort.

 

Senate committee hears bill to reduce business taxes and increase deductions from interest and dividends tax

  • The State House dome as seen on March 5, 2016. (ELIZABETH FRANTZ / Monitor staff) ELIZABETH FRANTZ

Monitor staff
Published: 2/1/2021 5:14:33 PM

A four-year Republican effort to lower New Hampshire’s business profits tax to 7.5% is moving forward with renewed energy this year – two years after Democrats paused the reduction at 7.7%.

At a Senate hearing Monday, the Ways and Means committee took up Senate Bill 13, a sweeping omnibus bill that aims in part to lower New Hampshire’s business taxes two more times.

This year, with Republicans resuming control of the State House and a two-year state budget process coming up, the effort may finally become reality.

Monday’s hearing set the stage for what is expected to be a session of fierce debates between Democrats and Republicans this year over whether to lower the state’s business taxes at all.

Sponsored by Senate President Chuck Morse, SB 13 would lower taxes on business income, from 7.7% to 7.5%. And it would reduce the business enterprise tax (BET) from 0.675% to 0.5%

Since 2015, Republican majorities in the House and Senate have pushed to reduce the rate of New Hampshire’s business taxes, the primary revenue source for the state. A compromise budget signed by Maggie Hassan in 2015 set triggers to lower the business profits tax rate from 8.5% to 7.9%. A 2017 Republican budget set the state on course to reduce that tax to 7.5% starting in 2021. But a Democratic takeover of the State House and an extended 2019 budget fight put that reduction effectively on pause.

The rate has been 7.7% since 2020. SB 13 would complete the Republican goal, staggering the drop to 7.5% over two more years. The BET would drop to 0.5% over two years as well.

“The reduction is important because we know our Main Street businesses are struggling right now due to the pandemic, and Senate Bill 13 will help,” Morse said at the hearing Monday. “Family-owned businesses that have existed for generations are being stretched to the breaking point due to no fault of their own. We need to do all we can to help them survive and rebuild as we move forward.”

According to Morse, the business tax reduction had been a priority of former House Speaker Dick Hinch, who died in December from COVID-19. Gov. Chris Sununu has also spoken in favor of reducing the rates this year.

Democrats have consistently objected to the drops in business taxes, arguing that they won’t necessarily bring about the economic stimulus promised by Republicans and that they’ll eat into the state’s revenue sources, which will downshift costs to communities and local taxpayers.

“The average business pays more in property taxes than state business taxes. Twice as much more,” said Rep. Susan Almy, a Lebanon Democrat and former chair of the House Ways and Means committee.

“Further reduction of our largest state level revenue source, which is paid overwhelmingly by multi-state and multinational corporations,that regard New Hampshire’s taxes as very low on their list of reasons to operate here, is counter productive both to our economy and our citizenry,” Almy added.

Republicans have said reducing the business taxes would bring new businesses in and allow existing ones to expand, which would in turn raise state revenues even with lower rates.

Democrats also noted that few small businesses actually pay business profits taxes. According to figures from the Department of Revenue Administration distributed to lawmaker, 49% of New Hampshire business profits tax is paid by businesses that make $1 million or more annually. That means roughly half of that tax comes from just 76 out of the state’s 74,343 registered businesses. An additional 29% is paid by the 537 businesses that make between $100,000 and $1 million in annual profits.

“So who will be helping by this legislation?” Sen. Lou D’Allesandro said. “The top people have been doing well. How are we going to help people who have no tax liability?”

Sen. Erin Hennessey, a Littleton Republican who represents all of Coos county, pushed back on the notion that lowering business taxes wasn’t important to small businesses.

“I heard from several small, locally owned businesses on Main Street here in Littleton wondering why we would do this to them,” she said. “Even though the big companies down south that we don’t see up here in the North County pay a lot of the taxes, that doesn’t mean that the taxes that small businesses up here in the North County pay are not significant to them.”

SB 13 would also carve out exemptions to the state’s interest and dividends tax, the only de facto income tax in the state. Currently, those 65 and older can earn up to $1,200 in income on interest or dividend payments before having to pay state taxes; SB 13 would double that allowance to the first $2,400. That $2,400 in tax free interest would also apply to those under 65 who are blind, disabled, or unable to work.

Morse said that measure was important to convince seniors to stay in the Granite State after retirement, rather than leaving for Florida.

Among its other provisions, SB 13 would streamline the licensing process for the state’s Office for Professional Licensure and Certification, allowing it to set its own rates for the 400 types of licensing fees it oversees.

(Ethan DeWitt can be reached at 369-3307, edewitt@cmonitor.com, or on Twitter at @edewittNH.)




Concord Monitor Office

1 Monitor Drive
Concord,NH 03301
603-224-5301

 

© 2021 Concord Monitor
Terms & Conditions - Privacy Policy