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Ovide's advantage: Real business tax reform
The Tax Foundation’s latest state business tax climate index, released this month, shows with great clarity why Ovide Lamontagne is the right choice for governor of New Hampshire.
Though the Granite State ranks 7th overall in business tax climate, largely because we have no broadbased tax, we rank a dismal 48th on the corporate tax burden. Last year we ranked 46th. We interviewed economist Scott Drenkard, author of the report, who said of New Hampshire’s drop: “It’s other states getting better, not New Hampshire getting worse.” The states that moved up? Michigan and Maine.
Not surprisingly, Drenkard said New Hampshire’s 8.5 percent business profits tax was high and that we score poorly on the way we treat net operating losses. In most states, businesses can “carry forward” their net operating losses for 20 years and even “carry back” those losses for two to three years. These provisions allow businesses that see big fluctuations in their income to be taxed more steadily so they don’t pay a huge tax bill one year and a tiny one the next. New Hampshire allows only a 10-year carry forward and no carry-back. New Hampshire also caps the carry-forward deduction at $1 million. Most states have no cap.
It just so happens that Ovide Lamontagne’s tax plan calls for extending the carry-forward deduction to 20 years and lowering the business profits tax from 8.5 percent to 8 percent. These two changes alone would mark a real improvement in our tax code. Lamontagne also proposes other reforms, such as allowing a permanent carry-forward of the business enterprise tax deduction against the business profits tax, that would improve our business tax climate.
By contrast, Maggie Hassan offers only one business tax change: an expansion of the research and development tax credit, which Lamontagne also proposes. And considering that she supported, voted for and for a long time defended the income tax on LLC owners that was so bad legislators repealed it only months after it became law, it is clear that she does not understand the burdens that high business taxes place on entrepreneurs. If we want to improve the New Hampshire Advantage and get businesses hiring again, Ovide Lamontagne is the governor we need.
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