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April 04. 2012 6:09PM

Senate weighs constitutional ban on income tax

CONCORD -- Depending on their perspective, it is either the cornerstone of the “New Hampshire Advantage” or a straight-jacket on future voters and their representatives.

Supporters and opponents of CACR 13, a constitutional amendment that would ban a personal income tax spoke at a Senate hearing on Wednesday.

The House passed the measure 257-101 in January, with well more than the three-fifths majority needed to move the amendment to the Senate.

To make it onto the 2012 ballot, the Senate would have to approve the amendment by the same margin.

The measure is the latest attempt to enshrine the state's lack of a personal income tax in the constitution. Past proposals have failed to make it on the ballot.

House Majority Leader D.J. Betttencourt, R-Salem, told the Senate Internal Affairs Committee that the amendment was about “preserving the legacy of the New Hampshire Advantage.”

He added the amendment was carefully crafted.

“This has been through the House four or five times in the past, and it's gone through a maturity process,” Betttencourt said. “There might be some challenges in court, but we're confident that this has been been vetted.”

The proposed amendment states that “no new tax shall be levied upon a person's income, from whatever source it is derived.”

Bettencourt said the language did not refer to any entity other than “a human being,” and that the tax ban would also apply to personal capital gains.

Opponents of the constitutional amendment insisted that it would it stood on shaky legal ground, that it would tie the hands of future legislatures, and that it would perpetuate current problems with the state's tax structure, particularly its reliance on the property tax.

Jeff McLynch, the executive director of the New Hampshire Fiscal Policy Institute, which deals with issues facing low and middle income families, said CACR 13 would “lead to a major expansion of the judicial branch in setting tax policy in New Hampshire.”

Citing a study of the amendment conducted by UNH law professor Marcus Hurn, McLynch said that under New Hampshire law, “person” is understood to include business entities. Even if the law were changed to say “natural person,” Hurd wrote, “the result would be to constitutionally freeze our system of business taxes.”

Cathy Silber, the executive director of Granite State Priorities, a social advocacy group, said the amendment was unnecessary and undemocratic.

“Future voters don't need today's voters to tell them what to think,” she told the panel. “However you feel about the income tax, these decisions are the responsibility of voters.”

Rep. Kenneth Weyler, R-Kingston, one of the sponsors of the amendment, countered that “the people who are against this want to grow government.”

“Our revenue stream is very stable,” Weyler added. “An income tax would bring great volatility” to state revenues.

In addition, he said, a constitutional amendment would solidify the state's tax friendly reputation.

“People considering moving here, can say ‘Oh, they'll never have an income tax,'” he said.

CACR 13 is among nearly a dozen amendments up for consideration this session, including one that has been a high priority for the Senate, CACR 12, which seeks to rectify education funding problems in the wake of the state Supreme Court's Claremont decisions.

The number of amendments prompted Senate Majority Leader Jeb Bradley, R-Wolfeboro, to ask: “If we have too many amendments on the ballot, isn't there the risk they could go down to defeat because of confusion?”

House Majority Leader Bettencourt agreed the constitutional amendments needed to be prioritized, but he said CACR 13 belongs on the shortlist.

“If you have too many constitutional amendments on the ballot, it frightens the public,” he said.

The Senate committee took no action on the amendment, nor has it been scheduled for a vote at this time.


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