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Diverse coalition urges no cuts in business taxes

State House Bureau

April 14. 2015 8:13PM

CONCORD — Groups opposing business tax cuts, one of the Senate’s top priorities, say the rate reductions will mean the state will be ill-equipped to meets the needs of citizens, transportation infrastructure and workforce development.

At a news conference Tuesday, representatives of small business, nonprofits, educators and religious organizations said the cuts will benefit large, multi-national corporations but hurt the state’s economy because needed investments will not be made.

About 40 members of the group, including 18 small businesses, sent Gov. Maggie Hassan a letter expressing concern about the business tax cuts and asking her to veto the budget or any other bills that would reduce the tax rates.

But Senate Republicans say the state has some of the highest business tax rates in the country, making it uncompetitive not only in New England but across the country. They claim the cuts — phased in over three-bienniums — will make New Hampshire more attractive to businesses seeking to expand or move here.

“By reducing the business enterprise tax and business profits tax in New Hampshire, we will help businesses grow, create jobs and restore the competitive business climate that has been lacking in our state,” said Senate Finance Chair Jeanie Forrester, R-Meredith.

Senate Bill 1 would reduce the business profits tax from 8.5 to 7.9 percent over the next three bienniums, while Senate Bill 2 reduces the business enterprise tax from .750 percent to .675 percent over the same period.

The Senate is expected to incorporate the tax cuts into its version of the budget when the Senate Finance Committee makes its proposal at the end of May.

According to Jeff McLynch, executive director of the New Hampshire Fiscal Policy Institute, the rate cuts will reduce revenue $28 million in the upcoming biennium and $80 a biennium when they are fully implemented.

“(The cuts will make) it all but impossible to restore funding for local aid, services for the developmentally disabled, the state’s public colleges and universities, or a variety of other areas vital to New Hampshire’s high quality of life,” McLynch said.

A Peterborough small business owner said the tax cuts will not influence his business decisions.

“I calculated how much these proposals would save my company when they are fully implemented, and it came to less than $150 per year,” said Tom Strickland, president and co-founder of Sequoya Technologies Group, a small IT company with eight employees. “$150 out of a million dollar budget isn’t going to influence my business decisions. I won’t be hiring new employees or buying new equipment as a result of this tax cut.”

He noted 93 percent of the state’s businesses are the same size as his company or smaller.

Strickland said he moved his family to New Hampshire 18 years ago attracted by the state’s quality of life. He said the state should invest in high-quality schools, well-maintained roads, and high-speed broadband internet, which will benefit all businesses.

Last month the House, largely down party lines, approved an $11.2 billion, two-year budget plan that drains the state’s Rainy Day Fund, and uses other dedicated funds to continue state education aid.

The plan cuts services to the developmentally disabled and the home-bound, elderly poor, ends the Medicaid expansion program, level funds the University System of New Hampshire, but addresses two lawsuits over the state’s mental health system and the Medicaid Enhancement Tax.

The plan reduces state education aid to school districts by about 10 percent in the second year of the biennium and does not include additional money for substance abuse treatment Gov. Maggie Hassan included in her budget plan.

Scott McGilvray, president of NEA-New Hampshire noted 41,000 students live in homes where there may not be enough food for all family members, and cutting business taxes would further endanger the public services these families need.

“Cutting our way to prosperity is a failed notion,” McGilvray said.

Kate Frey of New Futures said New Hampshire is in the throes of a substance abuse epidemic but lawmakers propose reducing prevention, treatment and recovery programs to begin addressing a problem that costs businesses $1 billion a year.

But Forrester said the Senate has always provided adequate funding for education and the most vulnerable.

“I am surprised to hear that some believe that by lowering New Hampshire’s business taxes, the Senate will somehow lose sight of individuals who are in critical need of services provided by the state,” she said. “I am confident we will develop a budget that addresses the needs of the state’s most vulnerable populations, while crafting a responsible, balanced budget.”

The Senate Finance Committee is expected to complete its budget work the week of May 18 and the Senate votes on the package by June 4.

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