Sunday, February 15, 2009

Comments on Lynch's budget ...

It's important to remember a few things when taking a look at Gov. Lynch's budget:

1) As Republicans have been stating for a while now, state spending increased 17 percent. So, in an economic downturn, where revenues are not keeping up with expenditures, cuts would be needed to offset such a huge increase in spending. While I agree that many of the things the state has tried to do in the last two years are good things, maybe it was done too soon, too expensively, too fast. One could surmise that maybe state spending should have been a bit more controlled in the previous Legislative sessions.

2) While many of the things proposed by Gov. Lynch are regressive in nature, a state sales tax is also regressive. If implemented, it would hit every single person in the state every time they purchased something, whether or not they were rich or poor, young or old. The governor tinkering with things to make ends meet without hurting the purchasing power of the poor or seniors was a good strategy.
A sales tax would also hurt our state economically because residents of Vermont, Maine, and Massachusetts, would no longer have a reason to do their retail spending here. This could potentially cost the state a lot of jobs in the retail sector, the only sector other than health care that seems to be retaining itself.
The rooms and meals tax would also suffer because no one from those states would be eating out after their trips to our malls. Let's not forget that we sock them all with a 9 percent tax whereas they could eat at home with just a 5 percent tax [in Massachusetts]. This could hurt border town restaurants and therefore, hurt jobs by folks who need those jobs most - students, moms, people with second jobs who need the tip income - etc.

3) While a state income tax is not as regressive, technically, it is worthy of suspicion, especially when we look at how other states have used it to randomly raise taxes whenever they needed to. In Mass., it has been a disaster over the years. Interested readers can check out this overview: ["Thank goodness New Hampshire has the pledge"].
In addition, historically, income tax advocates in New Hampshire have always promoted it as a way of eliminating the state-wide property tax. But guess what? The most recent proposal doesn't do away with the state-wide property tax! It only offers an exemption. If implemented, property owners with homes assessed at more than $100,000 will be paying both an income tax and state-wide property tax. There is no renter’s deduction in the proposal, so renters would see no rent relief at all in the drop in the state-wide property tax but their income would be sapped. In other words, some of the poorest residents in our state would be double-taxed! This is as regressive as the sales tax.
In addition to all of this, there seems to be no state-wide standard on assessments. I mean, look at the situation in Concord, where trailers are assessed at more than what they sold for or could sell for! Would it be long before some towns were monkeying with assessments so that some people could escape paying their "fair share" of the state-wide property tax? As the saying goes, figures lie and liars figure ... how long before cities and towns are at war over assessments in the wake of an income tax?
New Hampshire residents who work out of state would also get double-taxed on their incomes. Sure, some proponents note that Massachusetts, where they collect $260 million from New Hampshire residents, has an exemption for out-of-state income taxes paid. But how soon will it be after New Hampshire implements an income tax that the Mass. Legislature eliminates this loophole after realizing that $260 million in exemptions just flew out the window? Not long, let me guarantee you of that. If they are going to get into lawsuit tiffs over lost sales tax revenues at tire companies doing business in both states, it will only be a matter of time before this exemption disappears. Poof, those of us who live in New Hampshire and work in Massachusetts will see our tax burden double. If anything, we, the thousands of people who commute to Massachusetts to work, should be thanked - not punished - for enduring two hours of commuting a day and not burdening the Granite State economy with our employment needs [tongue firmly planted in cheek].

What is my point? Gov. Lynch is right to do all he can to balance the budget without broad-based taxes and I personally commend him for what he is proposing.

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