By Garry Rayno, independenh.org
Concord – A new study by New Hampshire Fiscal Policy Institute notes that corporate tax reductions cost the state between $ 795 million and $ 1.17 billion in permission income since 2015 without the often promised income bump due to increased economic activity.
Instead, New Hampshire’s business tax growth has lagged behind the national average, the average of New England and Maine and Vermont during the period from 2015 to 2024.
Trade taxes are the greatest tax source of money for the government of the State and has decreased since the last financial year.
With the Maison du New Hampshire finalizing its two -year budgetary ensemble offered this week, the prior income for rate reductions could have prevented some of the draconian reductions proposed such as the reduction in state aid to the New Hampshire university system, eliminating the NH Council for the Arts, the major discounts for health services and health.
Additional money could also be used to finance education, health care or infrastructure, or has provided tax discounts directly aimed at benefiting individuals of low incomes, according to the study carried out by the leader of the study Phil Sletten, research director at NHFPI.
The report notes that a federal study has revealed that the food aid for the poor as an additional nutrition aid generated $ 1.61 for each dollar invested, and federal aid for the state and the local government generates $ 1.34 for each dollar invested, while the rate reductions produce only 34 cents in the gross domestic product for each dollar tax reduction.
The NHFPI report, Business tax rate discounts have resulted between $ 795 million and $ 1.17 billion in public service income since 2015Use newly available data to update and extend the period of previous NHFPI estimates published in 2023 and show the budgetary impact of discounts of the two main commercial taxes of the New Hampshire: tax on commercial profits and business tax.
“Research clearly shows that companies’ tax rate reductions have not generated enough economic activity to compensate for the income deficits they have generated,” said Slett. “The growth of tax revenues of New Hampshire companies has lagged behind in Maine and Vermont, as well as average growth at the national level, indicating that the changes in tax policy of New Hampshire have not led to the increase in state revenues.”
While total corporate tax revenues have increased in the last decade, the study is based on analysis 2023 and finds no evidence that these increases have been motivated by rate reductions. Instead, the study revealed that national trends such as the sharp increase in companies’ benefits according to the COVVI-19 pandemic, seem to be the main engines.
National trends have also benefited other states that have not dropped their corporate tax rates.
The collection of trade taxes from New Hampshire increased from 124% from 2015 to 2023, which is much lower than the 166% increase in Vermont and the 167% increase in Maine during the same period, where the highest companies for the highest companies have not changed.
At the national level, the growth of commercial taxes was 192% during the same period, and 172% in New England, the states do not include New Hampshire.
“Budget decisions involve compromises and political decision -makers need good information to understand these compromises,” said Sletten. “This research provides information on the most effective policies to strengthen our economy and improve the life of granite staters.”
Although the combined income of BPT and BET increased during this period, existing research journals, distinct analyzes of economic changes and tax revenue trends in New Hampshire, and other states in the country indicate that reductions in the tax rate of business in New Hampshire would have reduced the levels of 2015, according to the report.
The study revealed that six key reasons to note that companies’ income was returned rather than increased thanks to cross -border investments.
According to Sletn, BET income decreased compared to the tax base after each drop in rate.
Between 2008 and 2015, BET revenues followed the salaries of the private sector, which increased by 20% while income increased by 23% during the same period.
But for the period between 2015 and 2021, private sector salary increased by 43%, but BET revenues only increased by 12%, and for the period 2015 to 2022, wages increased by 49%and BET revenues increased by 4%.
Sletten notes that the BPT was responsible for 97.7% of corporate tax growth during the period.
He also notes that there is no statistical relationship between BPT rate drops and employment growth or between cuts and gross growth in state products.
Between 2001-2024, the New Hampshire was lagging behind the nation, the region and the Massachusetts in employment growth, notes the report, and that the state also lagged behind personal income per capita for the nation, the region and the Maine and the Vermont.
The study also revealed that the national benefits of companies have increased and that companies to high profit pay most of the BPT.
Sletten noted that “a relatively low number of large declarants of commercial tax pay most of the income received”.
For the taxation year 2022, 2,554 declarants of commercial taxes or 0.2%, paid $ 326.4 million or 40.3% of the total.
The study also revealed that 60% of the revenues collected within the framework of the BPT were declarants “Edge”.
The study revealed that the number of companies depositing to pay commercial taxes increased from 2015 to 2021, but not enough to take into account the increase in corporate tax revenue during the period.
And the study found in the search for other states and at the national level does not provide proof that the increase in economic activity of corporate tax reductions compensates for loss of income.
The National Tax Journal has revealed that “major recent studies are reaching almost all imaginable observations: tax reductions increase, reduce, affect or have no clear effect on growth.”
The report concludes that “the tax rate reductions of companies promulgated in New Hampshire since 2015 have caused significant losses of the revenues of the available states for public services.”
The rate reductions are not decisive for the direction of the state economy, written SLETEN, but the BPT and the BET are key revenue sources to finance public services.
“While political decision -makers are considering the next state budget, the balanced budget requirements lead to compromise for political results for each dollar in increased income as well as for the deployment of dollars spent on services,” writes Slett. “Political decision -makers aimed at using state budget policy for the benefit of granite staters and the local economy can seek to consider tax reductions that directly affect New Hampshire residents to low and moderate income, or to preserve and strengthen the services that support individuals in the granite state, families and workforce.”
The study can be found at: https://nhfpi.org/resource/business-tax-rate-Rate-led-To-Between-795-million-And-1.17-billion-in-forgone-venue-for-public-services-since-2015/
Garry Rayno can be reached at garry.rayno@yahoo.com.