We don't run the State on sin taxes. We run New Hampshire on the property tax. Over two-thirds of all state and local taxes raised in New Hampshire are property taxes.
The tax burden in New Hampshire falls most heavily on the low and middle income range because home value is not proportional to income. It is not hard to find retired homeowners paying 15%, 20%, even 25% of their income in property tax. Retired homeowners in New Hampshire of moderate income pay more in state and local taxes in New Hampshire than in any other state. Meanwhile, the wealthiest New Hampshire citizens enjoy the next best thing to Monaco--on average they pay a little over 3% of their income in state and local tax. New Hampshire's highest-in-the-nation property tax burden drives away young families. Why should they pay $8000 in property tax on a middle class home when they can pay half that in other states?
Adjusted for inflation, New Hampshire's gas tax is taking in half what it did in 1988. This is why we all do a slalom on some roads, as we try to avoid the holes and cracks we hit the last time. The Department of Transportation says that over 25% of state-owned road miles are in poor or very poor condition. When businesses come to New Hampshire to scout new locations, we leave a bad impression. Why should they in invest in New Hampshire if we won't invest in our infrastructure?
When I was a kid growing up in New Hampshire, we took pride in the fact that when we returned home from a trip, the quality of the roads improved when we crossed into New Hampshire. We've lost that pride, because one party is beholden to a "Pledge" that allows no broad-based tax (other than the property tax), no new narrow-based tax, no tax increase, no fee increases, no new revenue, period. They won't support more revenue for our roads even though the decline in our roads and bridges is obvious to everyone.
Since New Hampshire “solved” the education funding crisis in 1999, the total state and local property tax bill in New Hampshire, adjusted for inflation, has increased by 58%, far exceeding the growth in the state’s economy (37%), and outstripping the ability of most people to pay. Meanwhile, the state’s general fund revenue, adjusted for inflation, has declined.
We have been told that tax cuts are good for the state budget because revenue will grow. The above chart shows that is just not so.
State revenue has declined because taxes were cut: the estate tax and inheritance tax were eliminated; the business profits tax and business enterprise tax were cut; and various tax breaks were written into the business taxes and the interest and dividends tax. In addition, some taxes, such as the cigarette tax and telephone tax, have not grown with the economy.
As revenue declined, the legislature compensated by downshifting state obligations onto property taxpayers. The state stopped contributing to the cost of the retirement system for municipal and school employees; revenue sharing was slashed; school building aid was eliminated for new projects; and state aid to public schools has declined after adjusting for inflation. These changes have increased property taxes by hundreds of millions of dollars.
Adjusted for inflation and population growth, state funding for our university system is 35% less than what it was in 1988. As a result, New Hampshire has the highest in-state tuition in the nation, and the highest rate of student loan debt. We want to retain our talented young people, but many of them discover that it is cheaper for them to attend a state school in another state, as an out-of-stater, than to go to UNH, Keene State, or PSU. A higher percentage of New Hampshire students go out of state for college than any other state. Once we lose them, we are unlikely to get them back. We could lower the cost of our state schools by increasing funding, but the New Hampshire tax "Pledge" against any new revenue stands in the way. So we shoot ourselves in both feet.