The following was contributed by Jacob Hale Russell.
Next month, Granite Staters will vote on a state constitutional amendment that would ban any new income tax. It’s well known that New Hampshire is a rare hold-out in having no broad-based income or sales tax (Alaska, rich in oil reserves, is the only other state with neither), but how did we get that way?
“Around the big-bellied stove of the country store in a New Hampshire town men sit and growl about taxes,” the Boston Globe wrote in 1930. They could have been talking about almost any of the past hundred years: it turns out the state has come close many times over the past century to adopting a sales or income tax. Politicians — and not just Democrats — predicted, proposed, praised and nearly passed broad-based tax bills in the 1930s, 1960s, 1970s, and even the 2000s.
The “Pledge” — the promise most prospective governors make to veto a sales or income tax — today seems like a fixture of New Hampshire politics. Actually, it’s been around since the 1950s, and became popular in the 1970s. Since then, “it’s become gospel on the Republican side,” says Dante Scala, associate professor of political science at the University of New Hampshire.
That’s made it hard for candidates to raise the issue in campaigns — even though opinion polls suggest there’s actually no clear majority in favor of any tax issue (with some residents supporting a sales tax, some an income tax, and others no tax at all). By bundling support for either a sales or an income tax into a single “pro-tax” moniker, backers of the Pledge have successfully moved the likelihood of a broad-based tax from “implausible to nearly impossible,” Scala says.
Here’s a timeline of New Hampshire’s flirtation with taxes since income taxes began to take hold in the early 20th century.
|1913||New Hampshire provides the final vote needed to ratify the Sixteenth Amendment to the U.S. Constitution, which opened the door to the federal income tax. (N.H. had rejected the amendment two years before.)|
|1929||Both New Hampshire and Massachusetts consider income taxes. Why? It may sound familiar -- Like today, proponents said high property taxes burdened landowners and unfairly distributed taxes. But, as the New York Times wrote, "New Hampshire manifests small enthusiasm for an income tax."|
|1930||The state Supreme Court tells the legislature it can pass an income tax as long as it's a flat-rate, not a progressive tax. That's because the New Hampshire Constitution refers to "proportional and reasonable assessments, rates, and taxes." But the Supreme Court says it's fine that the proposed law has a $1200 exemption for individuals, and $2000 for families. The House ultimately votes the tax down.|
|1937||The legislature again comes close to passing a tax -- 3% on income and 2% on sales -- but the bill dies.|
|1948||New England remains a hold-out in income taxation: Massachusetts and Vermont are the two major states in the region to rely on a wage tax. New Hampshire's main revenue sources are a tax on gasoline and a tax on vehicle registration.|
|1962||New Hampshire, Nebraska, and New Jersey are the only three states in the whole country without a income or sales tax.|
|1963||John King becomes the first Democratic governor in 40 years. Despite a fiscal crisis, he opposes a broad based tax. Desperate for revenue, the Granite State becomes the first state to approve a new lottery since the 19th century.|
|1964||The Republican platform opens the door to an income tax. As the chair of the Republican platform committe says: "Present financial resources are totally inadequate to meet increasing state costs, particularly education. There's no question that an income tax is the only way to solve this problem." The Globe reports that Republican legislators consider an income tax inevitable.|
|1967||The Ways and Means committee of the Republican-controlled House unanimously votes in favor of a 3% income and 2% sales tax. Democratic Gov. John King says he'd veto such a bill, but it never makes it to his desk.|
|1968||Republican Walter Peterson, the state House speaker, wins the gubernatorial nomination against two opponents who promise to veto any broad tax. "I've never been and am not now an advocate of a broad-based tax," says Peterson, "but I believe a candidate shouldn't pledge himself to veto such a tax."|
|1970||Meldrim Thomson stages a repeat primary challenge with Peterson. This time, he and William Loeb -- the conservative publisher of the Manchester Union Leader -- work to make the election entirely about taxes. Peterson has been under fire after replacing a complicated business tax system (including numerous small taxes -- such as "one on jackasses and stud horses") with a 6% statewide business profits tax. Peterson wins reelection.|
|1971||Peterson proposes a 3% income tax. The Boston Globe reports that "the stage is almost set for New Hampshire to join the rest of the nation with a sales or income tax." The bill fails by a 219-157 vote in the House. (Peterson blames legislators' fear of retaliation from voters, but says a majority actually back his plan.)|
|1973||After his third campaign, anti-tax stalwart Meldrim Thomson -- "Ax the Tax" is his campaign slogan -- becomes governor, and will win reelection two more times.|
|1977||A soda tax (15 cents a gallon) and a capital gains tax (8%) are defeated, as fears of broad-based taxes grow. Nonetheless, many politicians say a tax is inevitable -- the chair of the Senate finance committee, Robertson Trowbridge, says the state will need an income or sales tax within 4 years. The Speaker of the House, George B. Roberts Jr., shares the sentiment: "We're about to the point where we can't pass any more of these costs onto the property tax. We've about had it."|
|1981||The Globe reports that the "'pledge' suffers surprising setback". Thomson loses to Democrat Hugh Gallen, who took the Pledge himself. But in a non-binding straw poll, House legislators vote 218-103 in favor of a state income tax. Politicians on both sides predict a broad-based tax within a few years.|
|1982||Reflecting how quickly it's become a political institution, the Pledge is described as having been around "as long as anyone in [New Hampshire]'s hills and valleys can remember" by the Los Angeles Times. Hugh Gallen refuses to take the Pledge for his second term, and loses reelection to John Sununu.|
|2000||State Senator Jim Squires, running for the Republican gubernatorial nomination, refuses to take the Pledge. He loses the primary, and is the last serious instance of a Republican candidate refusing to take the Pledge. Meanwhile, Jeanne Shaheen -- up for her third term as Governor -- reverses course and decides not to take the Pledge a third time. She wins -- the last time a candidate is elected governor without taking the Pledge.|
|2001||Jeanne Shaheen pushes sales tax. It fails over fears that it would keep shoppers away from the state -- but that doesn't mean the idea of a broad-based tax is dead. Republican Rep. Liz Hager pushes for a 3.3% income tax; Republican Rep. Andy Peterson (son of former governor Walter Peterson) suggests a 1% gross receipts tax.|
|2002||Mark Fernald wins the Democratic nomination for Governor, making him the last nominated candidate to decline the Pledge. He loses the race 59% to 38%. Democrat John Lynch, who will be elected governor in 2004, 2006, 2008, and 2010, takes the Pledge each year.|
|2012||All the Republican candidates take the Pledge; Democrat Jackie Cilley refuses to take the Pledge (launching an ad campaign that portrays Pledge-takers as zombies) and is defeated in the primary. The legislature sends a proposed constitutional amendment to the voters, CACR 13, that would ban any new income taxes; it needs a two-thirds majority on November 6 to pass.|