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March 05. 2014 12:42PM

NH House kills, refuses to study, bill to expand Business Enterprise Tax to nonprofits

CONCORD – Hooksett Rep. David Hess’ attempt to expand the business enterprise tax to hospitals and other nonprofits died on the House floor Wednesday.

The vote was a close 173-163, mostly along party lines, with nine Republicans joining 164 Democrats in voting to kill the bill.

Republican Hess did not push for passage of the House Bill 1509  but rather for the House to approve a study of the issue of extending the BET, a tax on payroll and interest payments, to hospitals and other big nonprofits, including private colleges.

Hess has said that hospitals “are among the largest accumulators of wealth in our society today. Some of the biggest and most plush buildings around the state are being built by nonprofits. CEO income at hospitals is among the highest compensation of any business in the state.”

Nonprofits with more than $2 million in annual revenue from programs or services would have been  subject to the BET under the bill.

The bill also would have lowered the overall rate of the tax from .75 to .68 percent.

The House, however, followed the lead of the majority of its Ways and Means Committee, which had voted 12-8 recommending that the House vote the bill inexpedient to legislate.

The majority of the committee said the additional tax on nonprofits “would put many nonprofit budgets under great stress and lead to smaller financial commitments to their communities.”

“We have a very serious shrinkage of the base of the Business Enterprise Tax that is getting larger and larger,” Hess said on the House floor Wednesday.

He said that “some of the highest paid people in the state” head nonprofits and doctors no longer pay the BET if they are associated with a hospital or a large medical conglomerate.

“We wanted to start a conversation about this,” Hess said. “We wanted to have a discussion about alternatives that might be available.”

He said that 13 of the largest non-government employers in the state are nonprofits and employ about 31,000 people.

Most of the state’s hospitals, Hess said, have assets of more than $1 billion and one has assets in excess of $6 billion.

He said the bill as designed would not have applied to religious or small nonprofits.

But House Ways and Means Committee Susan Almy, D-Lebanon, urged killing the bill. She said it is “too narrow to address the change fairly” and would create a “constitutional problem” unless it also applies to what she called “fragile charities.”

Almy said most charities perform services generally recognized as “the obligation of the state,” to help the poor, elderly and needy, and “many of these charities are constantly on the edge of insolvency.”

She said that if the Legislature decided to study the bill, “We would have all these charities hanging in terror.”


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