New State House fight over business tax cuts
CONCORD – State Sen. Andy Sanborn says when it comes to New Hampshire’s business taxes, “we’ve got to be more competitive.”
That’s why the conservative lawmaker from Bedford is pushing a new bill that would lower both the business profits tax and the business enterprise tax starting later this year.
And at a Wednesday hearing of the state Senate Ways and Means Committee, which Sanborn chairs, Majority Leader Jeb Bradley testified in support of a bill he’s pushing, which would reduce the business profits tax starting in 2019.
But the two Democrats on the committee say they oppose further business tax cuts, with Sen. Dan Feltes of Concord telling NH1 News “if we do any tax cuts, it out to be for working families.”
Two years ago the GOP led legislature cut business taxes in the 2015 budget. The budget was vetoed that summer by then-Democratic Gov. Maggie Hassan, mostly over her objections to the business tax cuts. After two months of negotiations, a deal was struck which included triggered business tax cuts, with revenue benchmarks.
As part of the deal, the business enterprise tax was reduced from .75% to .72%, and the business profits tax was cut from 8.5% to 8.2%. The business enterprise tax is scheduled to drop again in 2018 to .675% and the business profits tax to 7.9%, on the condition that the state hits specific revenue projections.
Hassan is now in the U.S. Senate, and her Republican successor Gov. Chris Sununu is a proponent of further reducing business tax cuts. He campaigned on the issue in last year’s gubernatorial election, and in his inaugural address early last month Sununu declared that “we have to continue reducing business taxes.”
But he didn’t announce any new cuts in his budget address earlier this month, saying only that “we will continue our responsible reductions in business taxes already set to take place.”
Sanborn, who teamed up with Bradley two years ago in the fight for the last round of business tax cuts, told NH1 News during a break in the committee hearing that “we have to recognize that 27 states in America have also cut taxes. Every single one of them have cut taxes further, deeper, or bigger, than New Hampshire has. So even though we’re looking at tax policy to make tax reductions, we continue to fall further and further behind even if we do something. We’ve got to be more competitive.”
What the bills would do
His bill would drop the business profits tax down to 7.5% and the business enterprise tax down to .5% by the end of 2018.
Bradley’s bill would reduce the business profit’s tax down to 7.7% in 2019 and to 7.5% in 2021.
The Republican lawmaker from Wolfeboro told NH1 News “I think both bills should pass and go to the Finance committee and then we’ll look at what we can afford to do and how we can afford to do it best in the overall context of the budget.”
Sanborn added that “I am encouraged and hopeful that at the end of the day these two things will kind of merge into one product.”
And he touted that his bill would cut both businesses taxes, saying “we have to remember that even though we have 76,000 businesses in New Hampshire, really only about 400 of them pay the business profits tax.”
“In my perspective if we’re going to be doing tax policy, we should be looking at both large and small companies at the same time in ensuring that we are providing an equal benefit for everyone,” he added.
Neither Bradley or Sanborn’s bills have revenue triggers similar to the ones implemented in the 2015 budget agreement.
“One of the things I struggled with two years ago was saying ‘we’re only going to have good tax policy if we do something else’. And I think at the end of the day we either have good tax policy or we don’t have good tax policy. So at this point in both these bills they go back to that classic consideration of is it good tax policy or not,” Sanborn said.
Bradley told NH1 News that if the Finance Committee asks for triggers or benchmarks, they could be added to the legislation.
And he highlighted that “business tax revenue is up by almost 17% in this fiscal year. And was up in the last fiscal year.”
While he said the state can’t depend on such growth forever, “if we’re competitive, our economy’s going to grow and as our economy grows these tax cuts will help keep people here, and attract people here.”
D’Alessandro: ‘We’ve done enough with the tax cuts’
Longtime state Sen. Lou D’Alessandro argued now is not the time for more business tax cuts.
The Democrat from Manchester told NH1 News “I think we’ve done enough with the tax cuts. Let’s see what happens as a result of the tax cuts and then make decisions as we move forward. We just made significant changes in tax law in the state of New Hampshire. It’s seems to me we ought to wait and see how it all works out.”
And he warned that “what we’ve seen now in terms of increased revenues is underestimated revenues. Clearly we underestimated.”
He cautioned to “see what’s going on around here before we do anything else. We were told 7.9% was the place to be, the right thing to do, the right time. Let’s see if it works out.”
And Feltes argued that “we have the seventh best overall businesses taxes in the country. We can’t afford to continue to cut taxes for the special interest elite when we’re not cutting taxes for working families and helping working families get ahead and stay ahead. If we do any tax cuts, it out to be for working families.”
In another move, the Ways and Means committee supported a bill which would increase the deduction small businesses can make under the Internal Revenue Code for capital purchases to $500,000.
Sanborn said the bill would bring New Hampshire in line with the 40 other states across the country.