Published: 01/09/2021 7:00:05 pm
Modified: 01/09/2021 6:59:48 PM
The new leadership of New Hampshire House is sponsoring a bill to cut corporate taxes over a four-year period – with a potential tax impact of $ 138 million – regardless of how much revenue goes to the treasury during the pandemic .
House Bill 10, the main sponsor of which is the new House Speaker Sherman Packard, R-Londonderry, would cut the corporate income tax rate from 7.7% now to 7.6% this year and 7.5% in 2022. This would also reduce the business company tax from 0.6% to 0.55% this year and then 0.5% the next.
It would also remove the language in current law that associates tax increases with a decrease in government revenue.
This language was introduced in 2019 as a compromise that would have made it possible to push tax cuts only if revenue had increased by more than 6% and levy taxes if revenue had decreased by the same amount.
There were concerns that the impact of the pandemic on the economy and government revenues would trigger a trade tax increase, but the revenue shortfall was not as severe as feared.
However, the impact on government revenues prevented taxes from falling. This bill would allow them to move forward regardless of the state’s tax situation.
let’s wait and see
The Department of Revenue Administration estimates the tax cut would result in a $ 138 million decline in revenue over the next four fiscal years, based on an analysis using fiscal 2020 earnings.
The analysis suggests that this fiscal year, which ends June 30th, would only be just under $ 6 million. The 2020-21 semi-annual budget would be charged $ 78.5 million and revenues for 2023 would decrease by $ 53.7.
Such estimates even give sponsors the bill break.
“One way we can improve the economy is by creating more jobs, which will lead to more businesses coming here,” said Rep. Norm Major, R-Plaistow, chairman of the House Ways and Means Committee, of the hearings on the bill would hold off. “The thing we have to consider is that if the economy doesn’t change, and especially if it gets worse, we are in big trouble.”
Majors said he signed the bill “because I would like to make it a reality, but I’ll make my final decision after we have a public hearing.”
Major’s predecessor, Rep. Susan Almy, D-Lebanon, said it was a mistake to pass a bill without a trigger, especially before April when most companies file their annual taxes and the state gets a better idea of which one Kind of tax form it’s in.
“I think this calculation is incredibly risky,” she said. “We don’t know what the economy will be like after the pandemic. Alongside property tax, this is the largest tax. If it goes down, we need to significantly reduce the already severely curtailed services, and many of those services are important to companies or their employees who are important to the business. “
The New Hampshire Business and Industry Association “generally supports lower corporate taxes because we have some of the highest tax rates in the country,” said David Juvet, senior vice president of public policy. On the other hand, the BIA also wants to ensure that the state funds key priorities for businesses, such as adequate Medicaid reimbursement rates, to prevent costs from shifting to the group insurance market that businesses generally pay.
“It’s always a balancing act to match revenue and programs,” he said.
These articles are shared by partners in The Granite State News Collaborative. More information is available at kollaborativeh.org.