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Report: NH tax burden not bad
By JOHN DISTASO
Senior Political Reporter
Thursday, Mar. 6, 2008 Share on Facebook
A new study that "looks under the hood" of the property tax shows that New Hampshire's burden is not as high compared to other states.
Dr. Daphne Kenyon of Windham, a public finance consultant, said the three-year study she co-authored takes several often-ignored factors into account to produce what she says is a more accurate comparison. She said she hopes her work prompts a halt to "the casual demonizing of New Hampshire's property tax."
The study, entitled "Not as High as You Think: New Hampshire's Property Tax Burden" was released yesterday. It says:
-- When property taxes are compared to property market values, "at least a dozen states have property tax burdens higher than New Hampshire" and in some categories of property, the New Hampshire burden is among the lowest in the nation. She said depending on the property type, New Hampshire's property tax burden ranks between 13th and 45th in the nation.
►Click here to download a .pdf document of the study.
-- Traditional measures of property tax burdens -- taxes per capita and taxes as a percentage of personal income -- "ignore that the property tax base includes a number of components beyond residential property." She says conventional measures of the property tax burden are "skewed because they include property taxes paid by commercial and industrial entities, utilities and owners of second homes, many of whom are out-of-state residents.
Kenyon does not dispute that the state's property tax burden is "above average compared to the rest of the United States by some measures." Even so, she says, it's a good deal because it buys a "well above average" K-12 public education system, at least based on recent results of the National Assessment of Education Progress (NAEP) test.
Kenyon wrote the report with Michael E. Bell, Ph.D., of Maryland, executive director of the non-profit Coalition for Effective Local Democracy, whose stated goal is to help to build strong and responsive governments.
Kenyon said in an interview she hopes policy-makers and residents "look under the hood" and realize that homeowners are not the only ones paying property taxes, and, "You have to pay attention to exactly who is paying it."
Kenyon said she hopes the study, funded by Paul Montrone, chairman of the investment firm Latona Associates, is taken into account by those considering attempts to change New Hampshire's tax system.
"I'd like people to look more carefully at it and to refrain from casually saying that we in New Hampshire have the highest property taxes in the country. I don't think we do," she said. "They should not feel that the grass is so much greener elsewhere."
Kenyon and Bell write that based on traditional comparisons, New Hampshire's property tax in 2005 was $2,034 per capita, which they say was third highest in the nation, and $54.11 per $1,000 of personal income, which they say was highest in the nation.
But their study points out that U.S. Census Bureau figures for 2000 show that New Hampshire is third in the nation in the percentage of second homes in the residential housing stock, at 10.3 percent -- behind only Maine and Vermont.
"Unless all homes are owned by in-state residents (which is highly unlikely)," the study says, "those states with a high proportion of second homes will appear to have higher property tax burdens than they should when property tax burden is measured in the traditional manner."
The study also says that commercial and industrial property owners pass their property tax costs on to their customers as a cost of doing business.
"That's critical," Kenyon said. "If they sell products nationally and are paying New Hampshire property taxes, then some part of the property tax on that business is likely passed on to customers across the country. Yet, in the traditional measures of property tax burdens, all of their property taxes are counted as if they are part of the New Hampshire burden, but they're not."
The study says that a "more appropriate" way to measure property tax burdens is the "effective tax rate," which compares property tax liability to the market value of the property, which Kenyon and Bell call "the ideal tax base."
Using that measure as reported in a 2005 study by the Minnesota Taxpayers Association, Kenyon and Bell conclude that New Hampshire ranks lower in property tax burden than traditional measures indicate.
The Minnesota data compares taxes for "low-value" and "high-value" parcels in four categories of property in the largest urban area of each state -- residential homesteads, commercial, industrial and apartments. It also makes the same comparisons using a "typical" rural location in each state.
Using Manchester for the New Hampshire urban area, the Minnesota study shows that for residential property with a market value of $150,000, its "effective property tax rate" ranks 13th in the nation, and for residential property with a market value of $300,000, the rank is 15th in the nation.
New Hampshire's commercial property tax using this method ranks 40th in the nation, its industrial property tax ranks 45th and its tax on apartments rank 29th in the nation.
The Minnesota study cited by Kenyon uses Auburn as a "typical" rural location and says it ranks between 24th and 45th among states, depending on the use of the property.
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We moved to South Carolina five years ago this month (not for economic reasons). Here, we pay a 7% state income tax, a 7% state sales tax, plus a 1%+ county surcharge. Our property taxes are lower than in NH, but have increased since moving here. NH offers far better roads and municipals services and greatly superior schools. If it wasn't for the snow... Be thankful for what you've been blessed with.
- Mike Evans, Little River, SC
Everyone who complains needs to get over it, or move to Mass.
You can not have all that you want.
If that is your thinking, -again- move to Mass. where price of everything is outrageous.
The more money you give the government, the more they want to spend. Make them live within their means. Make government smaller and take those folks up on their offer to make the state better. If they truly want to help the $$ crisis- take a pay cut!
We have to run our households on the money we have- no more than that. The government should be held to the same standards.
- Pauline, Franklin
Hi Jonathan in Bedford,
Perhaps you should review the other taxes NH businesses pay (that you and I don't). There is an income tax in NH, it's paid by businesses. There is also the B.E.T., also a tax on business. Review the relative tax burden by state on businesses and you'll quickly find that those "fat greedy commercial entities" are keeping your property taxes in check.
- Edward, Hancock
It's not about what anybody seems to be talking about here. It's about fairness, which way of paying is fairer, base on income or solely base on housing and what town you live in. Comparisons to other states that the income tax just increased taxes is ludicrous. All tacxes in every state shave increased, NH percentage increase in taxes over the last 5 years seems extremely high.
Nety result the last 5 years, HIGHER taxes in NH, income tax result would have been: higher taxes. The question is one of fairness, people act like property taxes keep taxes low and government small, what it does in unfairly burden senior citizend the middle class and unburden the wealthiest among us. Legalized gambling would be my first choice, and if and when that fails we need to look at a fairer oprion that what we have
BTW the study says we rank between 13th and 43rd DEPENDING ON WHAT CRITERIA WE USE, What a stupid study if that's suppose to be a definitive conclusion
- Kevin, Derry, NH
To Jon in Bow:
As they say, "You can't have your cake and eat it to."
You wanted the new school built. I would much rather spend money paying teachers than spending tax dollars on a brand new school (ie status symbol for bow).
Maybe next time you should pay more attention on your towns meetings, and voice your opinion there.
- Pete, Concord NH
Another thing to remember is that *all* NH residents pay property taxes in some form or another.It doesn't matter if you rent or own.
- Sarah, Chester
A per capita tax burden of $2034 for a state that consistently ranks at the top of the country for such services as public education and public health is more than fair. Do complainers have any idea how favorably that compares to states that have several types of taxes? The State of NH has one of the most well-run, efficient governments in the country which is encouraged by its limited taxation.
- Jennifer, Holderness, NH
I can't believe how stupid this "Pledge" has made us all. I came to NH 15 years ago becuase of the lack of income tax thinking it was a great thing. Now I see that you have to either be rich or dumb to not see what it's doing to us. 10 years ago I bought a house here and had a property tax of about $2000 per year. I now pay just short of $10,000 per year for that same house. The tax exceeds my mortgage payment and approaches 20% of my income. My property was just reassesed for more than my neighbor's house with a similar lot size but is 50% larger than mine and has numerous upgrades we do not have. When I protested how fair this was, I was told their opinion stands and I should be happy my property is so valuable. "You have made a lot of money on your house, congratulations!" OK, just slow down. Until I figure out how I can seel just part of my house to pay the property tax then I'm stuck with all or nothing. I expect that I will no longer be able to meet the tax payment in the next two years. I will have to sell and use that money to down-size my house and move to a less desirebale school district where those taxes will also grow exponentially. Thanks to the "Pledge", middle class folks like me barely make it and are moving backwards. I call it, living the NH Advantage.
The true NH Advantage is a frugle government, not the lack of a braodbase tax. If we truely want to be fair, we need to cap property taxes at 10% of income so we don't keep driving out our youth and middle class. Further we have to wake up a realize that many times when the State saves money by making cuts, they pass the buck to the local property tax. At least the State has other ways besides the property tax to raise it's money.
Wake up New Hampshire!!!! This is going to end badly.
- Jon, Bow
According to http://www.retirementliving.com/RLtaxes.html, NH has the second lowest overall tax burden in the country expressed as a function of income. Please stop crying about property taxes! We have a good deal here and messing with the current formula is guaranteed to raise the overall tax burden. I don't understand the concern about people who use services but don't pay taxes. Who are these people? I don't think we have many pure loiterers here! Some folks mistakenly believe that renters don't pay property taxes, but they do. They're paying someone to live on their property, and that property owner is indeed paying taxes on the property. Visitors to the state pay rooms and meal tax, and shoppers are helping store owners to pay the taxes on their commercial properties. NH generates a fair amount of revenue from non-residents! Please take a look at the overall picture, and stop complaining about your inability to see the forest because there are too many trees blocking your view!
- Jose H, Manchester, NH
Oh please! These studies are so full of crap. Just like when the State says unemployment is down. It isn't down they just don't figure in the people no longer qualified to receive it. For all the Business we have and the Industry we have here our property tax is high and keeps going up! Along with oil and electric etc.. Our roads are swiss cheese, Bridges falling apart, Schools underfunded just to name a few. Elected officials making too much taxpayer funded salaries.
I can pay anyone to do a study. To say what ever I want it to.
- Eric, Manchester, Manchester
You would think with all the evidence around us in the other New England states this "spread the pain" idea of a more fair tax would be put to rest. YOU GIVE MORE REVENUE TO GOVERNMENT, IT GETS BIGGER AND SPENDS MORE!!! Read and absorb the study on the impact of enacting an income tax to relieve property taxes in CT. http://www.yankeeinstitute.org/main/
I've lived there folks, it does not replace anything but add to the overall burden and grow state and municipal dependant employees, thus more spending.
- mike, Hooksett
Leo--if you really want sales and income taxes that much, then perhaps you should find yourself a new residence. Keep government small, keep it out of my pockets, keep it out of my personal life. If you can't handle your property taxes, then its time for you to reassess your reality--stop spending more than you can afford. You and your ilk that overextend yourselves and then expect the government to bail you out (at the expense of your fiscally sane neighbors) disgust me. Point your finger in the mirror Leo.
- JB, New Boston, NH
Here's a big "See I told you so" so all the whiners looking to implement a sales or income tax. We have a pretty darned good deal here. Don't screw it up!! Keep the Pledge, keep the NH advantage, dump the Granite State increase-our-taxes front group calling themselves "fair".
- Mark, Amherst
Its easy for them to say the tax rate isn't burdersome. They aren't the ones paying them. My property taxes have almost tripled in the time I've owned my house, yet its value hasn't. While I have always been against a broad based tax like a sales tax, I'm beginning to think that its the only way to spread the pain to everyone who avails themselves of services but don't pay any property taxes.
- steve, nashua, nh
The great NH Denial continues. Yesterday's news (or not so new news) that we have a state government hardly worthy of a third world country and that the confiscatory RE tax burden isn't (remember that the next time you write out that check to the town) is met with approval. Good grief!
- Leo Paradis, Canterbury
So we're #13 - that's not a surprise, meaning there are about a dozen overly liberal, socialized states out there that have gone off the deep end in robbing the people who live there to pander to private agendas. It's nothing to get excited about that our tax rates are lower than corrupt states like NY, MA, CA, and NJ. This is the kind of liberal propaganda you usually hear before major pushes to hike taxes. Again, take a look at the numbers. Residents are on the high end of what this nation is paying on taxes, and yet the fat greedy commercial entities are 40th and 45th in the nation. It should be the other way around.
- Jonathan, Bedford
We need to remember always that broad-based taxes such as an income tax or a sales tax never replace a property tax but, instead, are used together with a property tax with the net result of higher taxes, as was the case in Maine, and is now the case in Connecticut, and other tri-tax states (states which have three taxes—property taxes, income taxes and sales taxes). We need to keep NH a uni-tax state (one tax state)—no income tax and no sales tax.
- Bob Kroepel, New Durham
More reason to come join us in Celebrating the Pledge and the NH Advantage.
- Jane, Bedford