By PAULA TRACY, InDepthNH.org

CONCORD – In its history, New Hampshire’s legislature has never passed an earned income tax.

And while there are no bills to that effect this year, a constitutional amendment to ban the legislature from approving income taxes is headed to the full House of Representatives for a three-fifths super majority vote to pass, likely on May 14.

CACR 12 passed the Senate 16-8.

The House Ways and Means Committee Monday voted 11-9 along party lines to support an amended version of CACR 12.

Republicans, who hold the majority in the committee and in the House chamber asked Democrats what they were afraid of, not letting the voters decide.

Democrats said that it is not a problem and that they should not be binding future legislatures.

Rep. Susan Almy, D-Lebanon, said the real question is what do the Free Staters want.

“What we have been doing is cutting our revenues so that the situation got harder and harder and harder for the people who pay property taxes in this state, which is most of them,” Almy said referring to the recent elimination or reduction of several taxes, including the interest and dividends tax on Jan. 1, 2025.

“And you are trying to eliminate the lower income people because they can’t afford it. And if we had a constitutional amendment that said that we are going to restrict the growth of property taxes which you people have also been suggesting…, we would end up with very few people able to still stay in this state.

“I think that it is a severe mistake to try to ban one tax in the Constitution and then make us try to figure out, we are probably going to end up with a sales tax, and the sales tax of course is also regressive,” Almy said.
“This is not a situation that is likely to happen, the income tax, in any time in my lifetime,” she said.

“They are removing revenues at the state level and moving the cost of collection down…to the local level. And I can understand that for the Free Staters because that is what they want. But I don’t understand it for everybody else.”

Vice Chair Jordan Ulery R-Hudson, said the purpose of the constitution has always been to restrain government and its growth.

“I think we should put it to the voters,” Ulery said. “It’s a big topic that affects all of us.”

Rep. Terry Spahr, D-Hanover, said that for 242 years New Hampshire has existed here and “we have had 121 elections where we have put that to the voters and every election the voters have said, ‘we’re good with how New Hampshire is operating.’ So my question is why should we handcuff or bind future legislatures to a potential, a harmful aspect that could come back to hurt us if we have a situation where it is an economic reality where we need to have all options on the table?”

Rep. Bill Ohm, R-Nashua, responded that by passing this “we are restraining future legislators not binding them in the sense that this cannot be overturned.”

Rep. Steve Smith, R-Charlestown, asked members to think of the 2009 legislative session when the budget was “challenging” and a session which followed where there were a whole lot of fees and taxes were raised after the fact.

“We are fortunate that they didn’t resort to saying, ‘well we just have to have an income tax.’ That is a scenario that I would like to prevent in the future. Maybe we will have an income tax at some point. The question for me is if that were to happen how I would want it to happen. I would not want it to happen as a knee-jerk reaction by a panicked legislature dealing with a particularly challenging budget. I would want them to take the time to go through it and say ‘I think this is the direction we are going to have to go’ and the really important part is ‘well not without the consent of the voters.'”

Smith added, “I realize there are people in the room who think we should decide if New Hampshire has an income tax at some point. I don’t. I think if ever we are going to take that big a step, the people should decide and it should take a year or two to go to the effort to pitch it to the public and wait for that answer and most importantly, then abide by that answer whether it is ‘yes’ or ‘no’.”
There would have to be another CACR to get rid of it, he said and he liked that.

Chairman John Janigian, R-Salem, said the bill would likely go on to the House floor when it meets on May 14. The vote was along party lines.