By GEORGE BALD

The House recently passed HB 155. The bill lowers the Business Enterprise Tax. As the State Senate considers this legislation, I hope they will consider the facts and not vote on the false notion that cutting taxes always creates jobs. Reducing State taxes will starve the state of revenue needed to truly support our citizens and our companies.

 I recently read a report by the NHFPI concerning the reduction of the Business Profits taxes. (2023)   The report concluded that few jobs were created but the State lost millions in revenue. It reminded me of a discussion I had with the President of a company that was looking at NH for an expansion. He told me a southern State offered him no property taxes for 10 years and a similar incentive on the business taxes. I said, “very generous.”  He replied, “They ought to levy the tax and use the money to educate their citizens. I can’t find employees with the skills we need. We will never expand there.”

Companies don’t want to pay more taxes than necessary, but they have areas of concern that are more important than business taxes. I would argue that if you asked most NH companies for their priorities, reducing business taxes would not be near the top. What would be at the top?

Education – Companies value a workforce that is educated and trained, and able to work in teams. Education is also important in attracting new companies to NH. A strong education system is key to persuading out-of-state employees to relocate here.  If companies here lack skilled workers and must reject business, they’ll expand in other states.  Gilead and Amgen recently leased new facilities in California, despite the offer of incentives from other States. The reason, a highly trained workforce. GE moved their headquarters to Boston; Facebook moved to Silicon Valley. Why?  An excellent, trained workforce.

Child Care

A report from the New Hampshire Fiscal Policy Institute shows that too few childcare slots highlight the risks of underinvesting in childcare.   The analysis estimated that in 2023, there was a shortage of about 9,100 childcare slots in the State, impacting family income as well as between $36 million and $56 million in lost business revenue. They also detailed a loss of between $9 million and $14 million in lost State and local tax revenue.

Housing

Housing costs can be a deterrent to attracting new business as well as limiting an existing company’s ability to grow and expand. If the State is not attuned to supporting more housing, the high cost and lack of housing will be a drag on job creation and make it difficult to attract new business.

Healthcare

We are fortunate to have an excellent healthcare system in our State. However, it is expensive and not evenly distributed across the State. It’s hard to attract young working families to the North Country because specialized healthcare, including birthing, is far away.  Also, the cost of worker’s compensation affects the overhead cost to a company.

Energy

Not all companies would rate energy cost as a major issue. A software company may not be impacted by energy cost, but a manufacturer with large equipment is far more impacted than by taxes. Many companies have competitors in other states that are paying 50% less for electricity. Legislators should focus on how to help companies reduce their costs.

Comparing all taxes across states is also important.   Many States have lower Business Taxes than NH, but they have other taxes we do not. Many impose inventory and sales taxes on business purchases.  Also remember, some States that have lower BPT/BET taxes, also have income taxes.

I am not critical of cutting taxes. I am arguing that if you are stating that you want to help New Hampshire companies, you need to truly understand the needs of companies that hire our citizens and help to create wealth and opportunity. If we better understand what is most important to them, we can focus our resources on projects that make a difference for their growth. It will also make a big difference for the citizens of our State.

The House made a big mistake passing HB 155. If Senators aim to support businesses and the citizens of our State, they should vote against HB155 and focus on addressing issues that are important to the public and essential for building a sustainable future economy.  

George M. Bald,
Rochester, NH
Former Commissioner of the Department of Resources and Economic Development