Laura Hainey of AFT-NH
Fall Election May Hinge on Debate Over Fiscal Future
Months of State House wrangling over marriage, collective bargaining, and whether the Speaker of the House is a tyrant are about to give way to a more usual topic: New Hampshire’s archaic tax structure. In addition to a gubernatorial election which could pit a status quo candidate against a reformer, voters could face as many as three proposed Constitutional Amendments with profound fiscal implications.
The one getting the most attention so far is CACR 12. (CACR stands for “Constitutional Amendment Concurrent Resolution.”) It seeks to undo the Supreme Court’s Claremont decisions,which declared education to be a fundamental right and ordered the Legislature to provide adequate funding for the state’s public schools. House and Senate negotiators will meet this week to try to iron out the wording.
While some amendment advocates say a change is needed to allow the State to target aid to poor communities, critics note that state’s failure to target aid is due to lack of political will, not Constitutional restrictions. Moreover, the amendment could make it possible for the State to withdraw from education funding completely. “Freed of constitutional restraint, the Legislature would retreat to the bad old days of patchy and inadequate support of public education,” Laura Hainey, New Hampshire President of the American Federation of Teachers, told participants at the May 19 NH Progressive Summit held in Henniker.
If a proposed amendment gets support from 3/5 of the members of the House and Senate it will be placed on the ballot for the November election. Then, if 2/3 of voters vote “yes,” it would be added to the State Constitution.
The House and Senate are also likely to approve CACR 13, which would prohibit “new” taxes on personal income. The point of this one is to install the state’s aversion to an income tax into the Constitution and create a higher hurdle to ever creating a system in which taxes would be related to the ability to pay. CACR 13 is held up so far only by a need to figure out how to make it clear that this amendment is not meant to restrict taxes on “corporate persons,” only “natural persons.”
Clifton Below, a former legislator who attended the Progressive Summit, says “what they are proposing is the very antithesis of what the founders and adopters of our state Constitution understood to be the foundation that is fair, proportional and reasonable.” Most of us now earn our income from wages, but that wasn’t the case when the constitution was written in 1784. At that time, most income derived from productive land, livestock, and commercial property. 18th century lawmakers specified that “every person may be compelled to pay in proportion to his income.”
In that sense, the state’s property tax began it’s life as an income tax. Now, reliance on the property tax maintains regressivity in the system and makes it hard for property-poor communities to raise the funds they need for schools and other public services.
Then there’s CACR 6. The House version would require a super-majority of the House and Senate to raise any taxes or fees. The Senate version would freeze state spending at current levels adjusted by the rate of inflation. The “compromise” under consideration might adopt both bad ideas. According to Jeff McLynch of the NH Fiscal Policy Institute, this would “lock in
the effects of the current recession,” including the drastic spending cuts made in the current biennial budget.
Arnie Arnesen used most of her time as opening speaker at the Progressive Summit outlining the threats posed by the 3 amendments. She also criticized another bill which would provide business tax credits for contributions to scholarship funds for private schools.
The state’s tax structure is already regressive, meaning it demands proportionally higher taxes from low income taxpayers than it does from affluent ones. Using figures from the Institute on Taxation and Economic Policy, McLynch said the wealthiest 1% of Granite Staters (income over $480,000 a year) pay only 2.0% of their income in state and local taxes. For the poorest 20% (income less than $25,000), on the other hand, state and local taxes captured 8.3% of their income. In other words, the poorest households are paying taxes at a rate four times higher than the richest.
While New Hampshire falls in the middle of states ranked by overall tax burden, we are 4th lowest in net state and local tax burden on the wealthiest 1%. The fabled New Hampshire Advantage? “New Hampshire is an especially great place to live and (not) pay taxes if you are in the top 1%,” says Below.
The 1% NH Advantage is held in place by “The Pledge,” a vow of fealty to the demands of William Loeb, former publisher of the Manchester Union Leader. In the 1970s Loeb made opposition to “broad based taxes” the major criterion for avoiding his editorial attacks. Since then most candidates for Governor – and all the winning ones – have given Loeb their pledges even though he’s been dead for thirty years.
Speaking to a lunchtime forum at the Progressive Summit, two of three candidates for the Democratic nomination for governor made it clear they think the state’s status quo tax policy is no longer viable. “I will not take the Pledge,” declared former Senator Jackie Cilley.
Cilley is not calling for an income tax, but she is not shying away from the issue either. She understands “the Pledge” keeps the State reliant on business and property taxes. “I know full well what the property tax does to people,” she told a house party audience Friday evening in Canterbury.
Bill Kennedy, another candidate who spoke at the Progressive Summit, advocates an income tax.
Maggie Hassan began her campaign for governor by taking “the Pledge.” But she does oppose CACR 12.
The Progressive Summit diverted 100 people from a beautiful early summer day to class and conference rooms at New England College in Henniker. In addition to tax and budget matters, conferees also attended workshops on topics such as affordable housing, immigration, proposed voter suppression laws, health care, and the attack on workers’ rights. The “Summit” was sponsored by NH Citizens Alliance for Action, Granite State Progress, and the Department of Sociology and Social Work at New England College.