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January 16. 2012 10:38PM

House to decide on state income tax ban

The House of Representatives will vote Wednesday on a proposed constitutional amendment that would ban the state from imposing new taxes on personal income.

The Republican-sponsored proposal aims to place greater protections on New Hampshire's historic status as one of a few states that do not tax personal income other than dividend and interest income.

“It sends a strong and unmistakable message to our citizens and to our business community that we are going to hold firm to the New Hampshire advantage of no personal income tax,” House Majority Leader D.J. Bettencourt said Monday.

“It is an important safeguard and fire wall that our citizens need,” the Salem Republican added.

But opponents claim the proposed amendment, CACR 13, is so broadly written that it would result in litigation that would have the courts ultimately deciding its meaning. It would also tie lawmakers' hands, according to state Rep. Susan Almy, D-Lebanon.

“It is trying to make sure you couldn't put an income tax in but, in the process, it is also stopping probably any future change in business taxes or any future change in any other tax we may have,” she said.

The proposed constitutional amendment says: “No new tax shall be levied, directly or indirectly, upon a person's income, from whatever source it is derived.”

The full House is expected to pass it by the required three-fifths majority. If so, it would then go to the Senate, which also must pass it by a three-fifths majority for it to be placed on the ballot in the November general election. It would take a two-thirds majority of voters to pass a constitutional amendment.

“When we're talking about changing the constitution, we are talking about our legacy. We are one of the last oases where, as a state, your personal income is not taxed,” state Rep. Frank Sapareto, R-Derry, said.

A constitutional amendment would better preserve that tradition than enacting a new state law, which could be reversed by a future Legislature, he said.

“The constitution kind of enshrines that. It sets a higher bar,” Sapareto said.

He said the current Republican-dominated Legislature has “the best chance I've ever seen” of getting the amendment on the ballot.

Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming have no state income tax, according to the Federation of Tax Administrators. New Hampshire and Tennessee tax dividend and interest income only.

Almy, who said she has supported an income tax and would do so again, said the proposed amendment is one of the most broad and vaguely crafted of the many she has seen come before the Legislature in her 16 years as a lawmaker.

Bettencourt disagreed. He said the language the House will vote on Wednesday has been the result of many years of work and avoids many of the concerns opponents have raised. The proposed amendment, he said, only pertains to “no new tax on personal income” and would not affect the current tax structure, he said.


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