Many New Hampshire lawmakers and business leaders argue that the recently passed increase in business taxes erodes the so called ?New Hampshire Advantage?, including low or non-existent taxes. But some critics of this outlook say the state?s tax rates may have less to do with New Hampshire?s appeal then other, less obvious factors.
Many business leaders argued against an increase in business taxes before lawmakers voted to raise them. In the last few hours of the session, legislators increased the Business Enterprise Tax by half to point seven-five percent, and the Business Profits Tax from 8 to eight and a half percent. Jen Sollars of the Manchester Chamber of Commmerce was still fighting the fight even after the measures were on their way to becoming permanent.
04 112 the more that we increase the business taxes in this state, the less likely it is that companies will relocate to the area. And we might actually see companies leaving the state. 04 122
Sollars and other anti tax advocates also argued that tax increases would hit the state?s small businesses harder than larger establishments.
MacNeill?s Corner Market is a small convenience store on a busy residential street in South Concord. The store sells cigarettes, beer and other convenience items. The register rings frequently, serving a steady flow of customers.
SOUND UP
01 300 box beep beep 327 333 sound of plastic bag 350 quick beeps, definite change rattle thank you, have a good one
10 33 hello. How was your day? Its still going on. I want a shirt like that, I really do. No bull. Well, it?s a political campaign, more than anything else. ha ha. 10
Kris MacNeill owns the store with her husband. She says they opened at the present location about six months ago, taking out thousands of dollars in loans to relocate and expand a smaller store. MacNeill says before they opened the new store, she and her husband planned how to pay down their loan and cover an expanded payroll, but the state?s decision to raise business taxes will cost her more, leaving little financial wiggle room.
08 45 I don?t know what we?re going to do. Its something that you need time, to really figure out. But this is something that we definitely weren?t planning on. 08 53
While MacNeill and other small businesses may find it hard to pay additional business taxes, most business analysts agree that the latest round of increases is modest, and will be absorbed without too much trouble.
Some critics admit that may be true, but, they say the real cost of raising taxes will be New Hampshire?s loss of competitiveness with neighboring states in attracting new businesses, or in keeping successful ones. State Revenue Commissioner Stan Arnold says those rivalries reach well beyond this region.
?If a company is looking at locating an operation in new England, then we compete with the new England states. But if a large corporation is looking to decide where they?re going to locate on the united states level, we?re competing with the south carolina?s, the kentucky?s and many other states that have very low business tax rate. 12 52
Legislative leaders say they raised business taxes to pay for education and balance the budget only after business leaders came to them and suggested the move. But some observers say state lawmakers may have taken away some of New Hampshire?s advantage, by not assuring a steady source of education revenue. UNH Associate professor Ross Gittel says businesses need trained workers from a good school system, and that takes money.
09 231 I really think, longer term, companies are going to take a second look when thinking about nh, recognizing that the state really hasn?t solved this education funding problem. This is a temporary solution, and even temporary for this year, because there?s a great deal of uncertainty about tax collections, because of the significant slowdown in the current economy. 09 256
Some economists say states can focus too much on trying to lower taxes, or keep taxes low. Peter Fisher, professor of urban and regional planning at the University of Iowa, is also the coauthor of ?Industrial Incentives?, a book that examined the economic competitiveness of about 20 states. Fisher says businesses value skilled labor, good transportation infrastructure, low energy costs, and efficient public services. He says many businesses see these services as more important than low taxes. For example, Fisher says the most successful states in the Midwest were not low tax states.
19 12 the two states that grew the most in terms of economic growth population growth were Minnesota and Wisconsin in this region, which have the highest taxes in the region and the highest wage rates. and some of the states with the lowest taxes have a lot of other problems as well, and low taxes are not enough. 19 35
Fisher says Wisconsin and Minnesota have more successful economies than Kansas and Nebraska because tax rates don?t matter as much as some people say they do. That evidence may suggest that the real New Hampshire advantage lies not in having the lowest taxes, but in maintaining an infrastructure that businesses find attractive.
For NHPR news, I?m DD
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