ARMI nears finish line for 10-year tax break to foster manufacture of human tissue, organs in New HampshireBy KEVIN LANDRIGAN
New Hampshire Union Leader
April 22. 2018 7:10PM
CONCORD — The New Hampshire Legislature appears on the verge of granting an unprecedented, 10-year tax holiday to firms involved in the Advanced Regenerative Manufacturing Institute (ARMI) project in Manchester and a student loan forgiveness program for workers who devote at least five years to it.
The House Ways and Means Committee voted, 22-1, to recommend the Senate-passed bill (SB 564), and the full House of Representatives was set to take up on Thursday.
Meanwhile, the Union Leader confirmed that Attorney General Gordon J. MacDonald’s office concluded this broad tax exemption was constitutional even though it would only be extended to firms involved in the manufacture of human tissue and replacement organs.
“While the New Hampshire Supreme Court makes the final decision on constitutionality of any law, based on our view of SB 564, we believe that both parts of the law are constitutional and defensible,” said Associate Attorney General Anne Edwards in a written opinion she wrote on March 6.
State prosecutors said this exemption is based on the break the Legislature gave to qualified investment companies from the Business Profits Tax in 1998 that has never been challenged in court.
“The Legislature may create reasonable exemptions such as adjustments, deductions and credits, on a uniform basis,” Edwards wrote, quoting from an opinion the state’s high court issued in 1970.
As crafted, the bill grants for 10 years exemptions from the state’s two business taxes on corporate profits and on all business activity to all firms that have at least 75 percent of their taxable activity in the ARMI project that the Manchester inventor Dean Kamen is spearheading in the Manchester millyard.
It also creates a $5 million student loan repayment program for employees in this new industry.
The Business Finance Authority would run the competitive loan program and private donations would be solicited to offset taxpayer costs.
State Rep. Bill Ohm, R-Nashua, pointed out Kamen had to win a fierce, national competition to bring ARMI here which has resulted in receiving $80 million in federal grants and more than $200 million in private investment.
But New Hampshire must change its tax climate to keep ARMI spin-off business here, he said.
“While the funding competition has been won, the competition for scaling up the manufacturing process remains intense. Other states, anticipating a windfall in business growth from potentially successful regenerative manufacturing, are actively soliciting ARMI’s relocation with offers that New Hampshire will not match,” Ohm said.
“The majority of the committee feels that it’s reasonable to provide limited incentives to this nascent industry that would directly benefit the state.”
The lone holdout on the House panel, Rep. Marc Abear, R-Meredith, said this giveaway cheapens the image of the state as one that does not engage in social engineering and instead lets all companies fairly compete.
“We best help the business community by lowering the tax burden we impose upon it,” Abear said. “With this bill, we are advantaging the few in the belief that the harm to the many is worth the price of the discrimination. That is not a sound judgment.”
The House panel recommends changing the measure to remove a clause that the only firms that can claim the tax break must be members of the Advanced Regenerative Manufacturing Inc. organization.
Ohm said this change would strengthen the bill to withstand a constitutional challenge.
But Greg Moore, state director of fiscally-conservative Americans for Prosperity, said adopting this bill would set a dangerous precedent.
““While we wish the ARMI project the best of success, the idea of having the state give away tax exemptions to one favored or well-connected industry, or in the case of this bill, one company, opens up Pandora’s Box in terms of encouraging cronyism and attempting to have the state pick winners and losers,” Moore said in a statement.
“This is inconsistent both with the concept of a ‘uniformly applied and broadly based’ tax code and with the notion of fairness that our state has cultivated. We should attract new business to New Hampshire by having the best business environment, not through chasing companies by throwing taxpayer subsidies at them.”