How Republican Gov. Candidates’ Tax Cut Plans Could Affect NH’s Bottom Line

NHPR

Republican Kevin Smith is proposing deeper business tax cuts than his primary opponent, Ovide Lamontagne.

With the gubernatorial primaries about a week away, the team at StateImpact is taking a closer look at how the leading contenders would boost New Hampshire’s economy.  If you tune into Morning Edition tomorrow and again on Thursday, you’ll catch our quick comparisons of the two Republican and Democratic plans.  (And, of course, we’ll be posting those discussions here on the blog.)

But in the meantime, Norma Love of the Associated Press looked into how the key Republican contenders’ plans could affect the state’s budget:

NHPR

While Lamontagne's proposing smaller tax cuts, state estimates found it would still hit revenues.

“[Ovide Lamontagne] proposes reducing the 8.5 percent tax on business profits to 8 percent over two years. That could cost the state potentially $9 million in lost revenue the first year and $18 million each subsequent year, based on estimates the Department of Revenue prepared for a House bill that died last year.

[Kevin] Smith proposes much deeper tax cuts. He would gradually reduce the tax on business profits from 8.5 percent to 5 percent by 2020. He would cut the business enterprise tax, which is a tax on wages, borrowing and dividends, from 0.75 percent to 0.25 percent over the same period. The proposal could cost the state $1.2 billion in lost revenue by 2020, based on rough calculations using 2012 BET receipts. If completely phased in, the state’s business tax receipts could be half what they are now.

The calculations do not take into account possible offsetting revenue from an improved economy or the potential revenue gains from reducing the tax and, with it, the amount of tax credits that businesses are eligible for.”

Love’s article is well worth the read, as it also goes into Smith’s counter-argument.