Concord
At a hearing before the House Ways and Means Committee, Chairwoman Susan Almy, D-Lebanon, submitted legislation that would bring the business profits tax back to 8.5 percent — the level before a cascade of cuts set in the prior biennium.
After a series of scheduled reductions, the tax is currently resting at 7.7 percent but is scheduled to drop to 7.5 percent in 2021 if revenue targets are met. Almy wants to reverse that trend, arguing that the cuts were unnecessary for business growth in the state and would deplete state resources down the line.
“Tax cuts should not happen before we identify how we will pay for them,” she said. “Fiscal responsibility means having the ability to think for the future.”
But the bill faces a long fight. Republicans, including Gov. Chris Sununu, quickly painted the plan as a reckless change in course that would disrupt companies’ plans.
“I’m sorry, so the Democratic head of Ways and Means wants to increase taxes?” Sununu said at a news conference. He added: “The Democrats don’t seem to have any ingenuity other than to raise taxes.”
To Almy, the cuts in taxes are just one piece of a recent history of weakened state support. With courts and social services underfunded, she argued, the increase was necessary to bring in the additional revenue.
In her testimony, the Lebanon representative pointed to nonprofits she said had “gone under” because of diminishing funds from the state. “This kind of thing has been going on a lot,” she said.
And she noted that programs not shouldered by the state had been pushed onto towns in the form of increased property taxes, which she said encouraged a downward spiral.
“I’m trying to give an impression of the crisis that we have been developing over years,” Almy said, comparing the state to a frog boiling in water.
Republicans took pains to highlight what they say has been a spike in business activity since the cuts were passed, pointing to recent surges in business tax revenues despite the lowered rate.
“Republican leadership proved a great model in the last session that when you cut taxes, when you provide regulatory relief, when you put businesses and employees first, the economy can thrive,” Sununu said.
Advocates for low taxes said the cuts had helped New Hampshire better compete against neighboring states. Prior to the cuts, the Granite State, which does not have an income tax, had been singled out as unfriendly to businesses, Ray Chadwick of the Granite State Taxpayers said at the hearing.
Hiking the rates could undo the advantage the state had accrued, he said.