By Rob Roper
The New Hampshire Union Leader recently posted an editorial about their Legislature’s 2015 decision to cut taxes on New Hampshire businesses. The tax cuts are still in the process of being phased in, but when fully implemented, the Business Profits Tax will be reduced by nearly 12 percent, and the Business Enterprise Tax by 33 percent.
When these tax cuts passed, the article reports, “State House Democrats warned that shaving the state’s high tax rates slightly would ‘blow a hole in the budget.’”
According to the Department of Administrative Services’s monthly revenue report, general and education fund revenues were $5.5 million ahead of the budget plan adopted earlier this year thanks to the state’s two main business taxes generating more revenue than anticipated. For the year to date, revenues are $11 million, or 1.6 percent, ahead of schedule [emphasis added].
This is important to mention for two reasons. First, there is the general lesson to be learned that when you reduce the barriers (such as cost) to doing business, you get more activity that generates more revenue. And, when you increase those costs you get less of both.
The second is the fact the New Hampshire, which we are all well aware has no income or sales taxes, is taking steps to make their business climate even more competitive. And it’s working.
Let’s hope Vermont’s Legislature considers both of these lessons as they debate things like $15 minimum wage, a new payroll tax to cover the cost of a government-run Paid Family Leave insurance program, and a Carbon Tax.