New Hampshire has a troubled relationship with taxation, more specifically property tax.
Candidates over the years have run on implementing an income tax and consistently failed to sell the people on the idea. However, I think there could be some promise to add an income tax in N.H as one of the biggest problems in the state regarding taxation is how steep our property tax rates are.
According to tax-rates.org, N.H. has the second-highest median property tax rate in the entire country at 1.86% or $18.6 per $1000 of property value. The only state with a higher median is New Jersey at 1.89% or $18.9 per $1000 of property value. This issue has only been worsening over time.
The Keene Sentinel had reported in a Nov. 12, 2023 article on property values soaring in Harrisville by a staggering 66% as part of tax reassessments caused by N.H.’s tight housing market. Increases in value such as this are pummeling New Hampshirites and driving up their taxes.
Governor Sununu has touted that N.H. was the only state in New England that had a growing population in recent years; however, I do not think he sees the harm it is doing. With our growing population, our severe housing shortage and a completely unbalanced tax system, locals are shoved out of their homes one dollar at a time. Gentrified towns and cities as the affluent find a country home, turning the state into a flatlanders’ Sudetenland. If the way the state government collected taxes was altered then the average person would not feel the financial hurt as bad.
The addition of a state income tax would allow for a more fair collection of monies from people, as Karl Marx put it, “From each according to his ability, to each according to his needs.” An income tax would remedy the former part of that quote, as your income increases so does that percentage of tax you pay. It would primarily allow the state and towns to address property tax rates and lower them significantly, sheltering people from rapid property value shifts.
Another significant issue with state tax collection is just how localized everything is. While I can appreciate how long N.H. has maintained the way local government has been run as select boards since colonial times, not everything needs to be delegated to towns. Also, while I think local school districts are important to be run by their constituent communities and continue to be run that way, the funding should come from the state.
One of the single largest expenditures towns pay are school taxes. If the state education was restructured and increased to, say $10 per $1000, instead of less than $2 per $1000, these more affluent towns would have to pay higher taxes they can usually avoid.
Another solution would be something they have done in Pennsylvania which is to implement a land value tax (LVT). A LVT system creates a two-tier tax system, with the raw value of the land being taxed at a higher rate than any improvements on the parcel. It incentivizes people to develop land that they do have and more importantly, it would lower people’s overall property taxes as the house they own is the most valuable thing anyone will have on a piece of land. Overall N.H. would sorely benefit from any sort of tax reform.
Timothy Fitzpatrick can be contacted at
tfitzpatrick@kscequinox.com
