NH tax-cutting bill unlikely to grow job market, study says

A tax-cutting bill passed by the N.H. House would likely do little to stimulate job growth while slashing millions of dollars in funding the state uses to pay for public services, an analysis released Tuesday says.

House Bill 155, which is still pending in the state Legislature, would lower the business enterprise tax rate from 0.55% to 0.50%.

The N.H. Fiscal Policy Institute study said that if this legislation were now in effect, it would cut $26 million from state revenues yearly. That’s an amount equivalent to half of the aid the state provides to towns and cities for maintaining roads and bridges.

Opponents say such cuts force the state to shift more expenses for essential services down to the community level, leading to increases in local property tax rates, which are already among the highest nationally.

Advocates contend that tax reductions stimulate the economy in a way that yields net state revenue growth.

But the study found that past experience hasn’t borne this out.

The tax, also known as BET, is based largely on wages paid by businesses. Wage growth would be expected to lead to higher tax revenues.

“After past rate cuts, however, BET revenue fell and has not caught back up … indicating economic growth did not offset the revenue losses,” said an NHFPI news release about the study.

Phil Sletten, the NHFPI’s research director and the author of the study, elaborated in the release.

“The evidence shows that lowering the Business Enterprise Tax rate would reduce revenue for public services, while the vast majority of businesses would see savings that are too small to significantly change hiring or investment decisions,” he said.

In an email to The Sentinel on Monday, Sletten also explained the effect state tax cuts have on property taxes.

“In the past, state policymakers facing resource constraints have reduced aid to cities, towns, and school districts, which increases upward pressure on local property taxes,” he said.

“While not every resource constraint on the state has resulted in less aid to local governments in recent years, tighter state budgets raise the chances of such decisions, especially as the state will likely have fewer federal resources to run existing programs in the coming years following last year’s federal policy changes.”

The study found that the average business paying BET would have saved about $565 per year if the change were now in effect.

“After excluding the largest firms (those with more than $44 million in taxable payroll or other compensation), businesses with BET liability would save about $336 per year on average, an amount unlikely to influence employment decisions. Nearly half of BET filers do not actually owe BET, suggesting no benefit at all,” the study said.

House Bill 155 was first introduced in early 2025, but was held over for further consideration by the N.H. Legislature this year.

Rep. Joe Sweeney, R-Salem, testified about the bill before the House Ways and Means Committee a year ago.

“We know that when we lower taxes we allow businesses to keep more of their hard-earned money, which fuels investment, job creation and innovation,” he said at the time.

“This is not just about cutting taxes, it is about creating opportunity. By reducing the BET rate, we are empowering businesses both large and small to expand, hire and invest in their communities.”

He predicted that critics would raise concerns about the impact on state revenue, but stressed the potential for economic growth.

“When businesses thrive, the ripple effects are felt far and wide. Employees benefit from better wages and more job opportunities, local economies are invigorated and our tax base grows naturally, ensuring that the state has the resources it needs without burdening taxpayers.

“This is the virtuous cycle of growth that we know tax cuts unleash.”

A separate NHFPI analysis estimated that business tax cuts between 2016 and 2024 caused the state to lose out on $795 million to $1.17 billion in revenue it might have collected.

N.H. Rep. Susan Elberger, D-Nashua, spoke to Sweeney at last year’s hearing.

“It may be true that state taxes are diminishing, but I can assure you that in Nashua, property taxes have been going up pretty consistently,” she said.

“What happens is that the state downshifts costs to people who are paying property taxes. I hear this from my colleagues around the state.”

Cheshire County Administrator Chris Coates said in an interview Monday that the state has pushed to the local levels a series of expenses related to nursing homes, public employee pensions, public schools and more.

“The state needs to see that the perfect storm is upon us and that we are taking on water faster than we can pump,” he said.

“Cheshire County continues to advocate for responsible and consistent state funding practices that meet statutory obligations without shifting costs onto local property taxpayers.”

Republicans passed HB 155, 189-165, in a partisan vote in the House on Jan. 8.

If it passes both chambers of the Legislature, the bill would go on to Gov. Kelly Ayotte for her consideration. The bill would apply to taxable periods ending on or after Dec. 31, 2027.

These articles are being shared by partners in The Granite State News Collaborative. For more information, visit collaborativenh.org.