Economic Presentations Dominate 'Tax Summit'

Given the strident rhetoric surrounding the Ways and Means informational session, it was a little surprising that only about two dozen came to protest the meeting.

Sfx: car honking in support, small crowd cheering back

What wasn’t surprising was what was said inside the committee’s conference room at the Legislative Office Building in Concord.

The so-called liberal economist Jeff McLynch of the Institute for Taxation and Economic Policy told the respectful crowd, the state’s tax structure isn’t fair.

TAPE: the most affluent people...are paying a third of the effective tax rate that low and moderate citizens are paying...the best option to you and your colleagues is to institute an income tax.

The so-called conservative economist, Scott Hodge of the Tax Foundation explained to lawmakers that property taxes and sales taxes are less harmful than an income tax.

TAPE: at the end of the day, I would say that NH’s goal should be like Wal-Mart in the land of Neiman Marcus. And that is to have everyday low taxes, every day. And allow the customers to come to you because you are the most competitive place to do business.

But later in the day, a number of local economists warned lawmakers that economic conditions and the demographic makeup of the state is changing.

TAPE: New Hampshire’s economy is at risk.

Professor Ross Gittell of UNH says lawmakers should look closely at several factors.

He believes areas of the country with technology companies, strong housing markets, and concentrations of education and health services will resume economic growth quicker than other places.

That’s good news for some of the state’s most populated counties, but he says it also means the state has to prepare itself.

TAPE: the technology companies, the professional business service firms that we have...there’s going to be competition for those firms. And those firms are going to be looking at our 50th ranking in corporate taxes...and these firms are highly mobile. And they will move to where the advantage is, where the economy is going to go.

Gittell also pointed out that he doesn’t think the state isn’t doing enough to attract the high-tech sector.

TAPE: our technology base has deteriorated over time. we have the same level of technology employment the state had in the early 1990’s. we’ve declined in rank in terms of concentration of high technology jobs.

Finally, Gittell added that he is troubled by a decline in what’s been called the innovative economy, like small business startups and entrepreneurs.

TAPE: that’s the most troubling set of statistics I’ve seen all day.

Economist Lisa Shapiro works for the law firm Gallagher, Callahan and Gartrell.

TAPE: That has been our source of growth, our innovativeness. And we are losing that edge. Now, in large measure that is a demographic phenomenon...the driver has been in our state, people coming in who are highly educated, and that’s stopped. And we are going to have to find another formula.

Several members of the Ways and Means Committee said the presentations had given them a lot to consider.

Chair Democratic Representative Susan Almy says the talks have helped her see that economic growth in the state and nationwide will be a lot slower over the next few years.

TAPE: and that means that we are either going to have to accept higher tax burdens in this country and in this state or we are going to have to find a way to restructure our government...and either one of those is pretty painful. Especially if we need to increase taxes further in this biennium or the next biennium while the Recession is still going on.

Republican committee member Representative Jordan Ullery agrees with Almy about the two choices facing lawmakers.

TAPE: we can tax the living daylights out of our children or we can restructure government services.

Ullery says if the state doesn’t restructure, then it will end up with an economy as blighted as that of Michigan.

The informational sessions continue tomorrow.

For NHPR News, I’m DG.