More On The Massachusetts-vs-New Hampshire Economic Debate

Recently, State Impact examined New Hampshire’s economic development strategies and compared them to what Massachusetts is doing.  “Six Ways To Look At How NH Does — And Doesn’t — Attract Economic Development” has been one of our most popular posts since the site went live late last month.  Our post, in turn, was inspired by a Boston Globe profile of New Hampshire’s Salesman-In-Chief Michael Bergeron.  Now, Globe reporter Jay Fitzgerald is revisiting the question of how Massachusetts stacks up to New Hampshire on the growth front. 

Interestingly enough, while Fitzgerald and State Impact have looked at different aspects of both state economies, we’ve reached a similar conclusion: The findings are mixed.

hyperion327 / Flickr

Boston Globe reporter Jay Fitzgerald argues that if you look at the tax rate for businesses, Massachusetts is actually the friendlier state.

For example, Fitzgerald found the personal tax burden boils down to this: Massachusetts residents pay some of the highest taxes in the country, and New Hampshire the lowest.  But if you measure by personal income, Massachusetts comes out near the bottom…but New Hampshire is at the bottom.  Fitzgerald also, predictably, points out that New Hampshire has high property taxes (to make up for other points where the tax burden is little or nothing).  But then, there’s this interesting nugget,

 

“Companies pay an 8.5 percent tax on profits, plus a 0.75 percent enterprise tax on employers, based on total compensation paid to workers. The tax rate for most corporations in Massachusetts is 8.25 percent; banks pay 9.5 percent. These rates are scheduled to drop to 8 percent and 9 percent, respectively, on Jan 1.”

In other words, New Hampshire businesses pay one percent more in taxes than Massachusetts companies.  And when the Massachusetts tax rate goes down, New Hampshire’s rate will be 1.25 percent above that of the Bay State.

He also notes that both states have high labor costs, New Hampshire actually has higher electricity costs, and the Granite State’s growth isn’t what it’s cracked up to be,

Brian Hawkins / Flickr

Fitzgerald reports Massachusetts is actually recovering faster than most of the country...including New Hampshire.

“…coming out of the last recession, Massachusetts has experienced one of the nation’s strongest recoveries. In 2010, the Massachusetts economy grew more than 4 percent. That was the nation’s fourth-fastest growth rate, compared with 1.3 percent in New Hampshire and 2.9 percent nationally, according to the US Commerce Department.”

Then, Fitzgerald cites University of New Hampshire economist Ross Gittell (if his name seems familiar, check out our Green Jobs feature post…).

“The two states’ often contrasting policies actually complement each other, allowing employees and employers to flow back and forth across the border while keeping dollars and jobs within the region, Gittell said. For example, nearly 100,000 New Hampshire residents work and file income taxes in Massachusetts. Their cross-border earnings and spending help support the economies of both states.

‘It’s good for firms to have a choice between states in New England,’’ said Gittell. ‘It allows companies, if they so wish, to move to New Hampshire to save on costs, rather than moving jobs to South Carolina or elsewhere. This way, jobs are kept here in the immediate region.’”

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