{"id":561,"date":"2011-08-04T15:35:47","date_gmt":"2011-08-04T19:35:47","guid":{"rendered":"http:\/\/stateimpact.npr.org\/new-hampshire\/?p=561"},"modified":"2012-01-11T10:33:20","modified_gmt":"2012-01-11T15:33:20","slug":"six-ways-to-look-at-how-nh-does-%e2%80%94-and-doesnt-%e2%80%94-attract-economic-development","status":"publish","type":"post","link":"https:\/\/stateimpact.npr.org\/new-hampshire\/2011\/08\/04\/six-ways-to-look-at-how-nh-does-%e2%80%94-and-doesnt-%e2%80%94-attract-economic-development\/","title":{"rendered":"Five Ways To Look At How NH Does \u2014 And Doesn&#8217;t \u2014 Attract Economic Development"},"content":{"rendered":"<div id=\"attachment_574\"  class=\"wp-caption module image right\" style=\"max-width: 300px;\"><a href=\"http:\/\/stateimpact.npr.org\/new-hampshire\/2011\/08\/04\/six-ways-to-look-at-how-nh-does-%e2%80%94-and-doesnt-%e2%80%94-attract-economic-development\/289611800_887bec6b85\/\" rel=\"attachment wp-att-574\"><img decoding=\"async\" loading=\"lazy\" class=\"size-medium wp-image-574\" title=\"Welcome To Massachusetts\" src=\"http:\/\/stateimpact.npr.org\/new-hampshire\/files\/2011\/08\/289611800_887bec6b85-300x225.jpg\" alt=\"\" width=\"300\" height=\"225\" srcset=\"https:\/\/stateimpact.npr.org\/new-hampshire\/files\/2011\/08\/289611800_887bec6b85-300x225.jpg 300w, https:\/\/stateimpact.npr.org\/new-hampshire\/files\/2011\/08\/289611800_887bec6b85-220x165.jpg 220w, https:\/\/stateimpact.npr.org\/new-hampshire\/files\/2011\/08\/289611800_887bec6b85-138x103.jpg 138w, https:\/\/stateimpact.npr.org\/new-hampshire\/files\/2011\/08\/289611800_887bec6b85.jpg 500w\" sizes=\"(max-width: 300px) 100vw, 300px\" \/><\/a><p class=\"wp-media-credit\">Jimmy Emerson \/ Flickr<\/p><p class=\"wp-caption-text\">Although New Hampshire is the clear winner in the cross-border business recruitment game, some Granite State businesses are finding our southern neighbor to be a welcoming place.<\/p><\/div>\n<p>Are New Hampshire&#8217;s low tax policies helping it attract economic development? The jumping-off point for this post, and a <a title=\"NH\u2019s Sort-Of-Secret, Cross-Border Business Poaching Operation\" href=\"http:\/\/stateimpact.npr.org\/new-hampshire\/2011\/07\/29\/nhs-sort-of-secret-cross-border-business-poaching-operation\/\" target=\"_blank\">related post<\/a> from last week, is data on the\u00a0movement of businesses and jobs between Massachusetts and New Hampshire.\u00a0 The image perpetuated by area media more or less fits the mold of <a title=\"New Hampshire\u2019s secret salesman luring Bay State firms across the line\" href=\"http:\/\/articles.boston.com\/2011-07-08\/business\/29752484_1_massachusetts-recruitment-lower-tax-bills\" target=\"_blank\">a piece in <em>The Boston\u00a0Globe <\/em><\/a>that characterizes New Hampshire as the beneficiary of jobs and companies leaving Massachusetts. As the writer notes, New Hampshire is a business-friendly, no-frills place, and its super-lenient tax code\u00a0is a constant temptation for Massachusetts establishments weighed-down by\u00a0a bloated, spendthrift state.<\/p>\n<p>But various studies and data point to a more complex relationship between New Hampshire, Massachusetts, businesses and taxes.\u00a0 And from that\u00a0information,\u00a0we&#8217;ve found five points\u00a0on economic development that are\u00a0often lost in the\u00a0broader story.<\/p>\n<p><!--more--><\/p>\n<ul>\n<li><strong>Yes, Massachusetts is losing more businesses to New Hampshire than to any other state, but\u00a0not as many\u00a0as you might think<\/strong><br \/>\n<a title=\"Playing the Lottery: The Impact of Interstate Relocation on Massachusetts Jobs\" href=\"http:\/\/www.pioneerinstitute.org\/pdf\/100616_playing_the_lottery.pdf\" target=\"_blank\">A study by the Massachusetts-based Pioneer Institute<\/a> think tank found that over 17 years, nearly 1,500 of the state&#8217;s businesses moved to New Hampshire.\u00a0 And when you count <em>all <\/em>the businesses leaving Massachusetts for other states, it averages out to more than one business leaving the state every day&#8230;for <em>17 years<\/em>.\u00a0 But Pioneer Research Director Steve Poftak\u00a0says in reality, those numbers are very small, &#8220;When you look at the overall numbers, in any given year in Massachusetts, 600,000 jobs, 17 percent of the total jobs in the state, are created or destroyed.\u00a0 In the worst year firms\u00a0[leaving] the state only accounted for 2 percent of that.&#8221;\u00a0 In other words, New Hampshire&#8217;s competitive economic policies aren&#8217;t triggering a Mass migration of businesses to the Granite State.<\/li>\n<li><strong>New Hampshire loses more people \u2014 and businesses \u2014 to Massachusetts than to any other state<\/strong><br \/>\nAccording to <a title=\"US Census Bureau\" href=\"http:\/\/www.census.gov\/\" target=\"_blank\">Census<\/a> data compiled and provided to NHPR by the <a title=\"New Hampshire Center For Public Policy Studies\" href=\"http:\/\/nhpolicy.org\/\" target=\"_blank\">New Hampshire Center for Public Policy Studies<\/a>, Massachusetts has claimed 78,459 New Hampshirites over the past decade \u2014despite its heavier personal tax burden.\u00a0 Of course, given the close proximity to the Bay State, and by extension, the Boston metro, it&#8217;s probably not surprising that New Hampshire is losing people.\u00a0But it might be surprising to some that according to the Pioneer Institute, from 1990-2007, 679 Granite State businesses also pulled up stakes and headed south.\u00a0\u00a0That wipes out about 47 percent\u00a0of New Hampshire&#8217;s business gains from\u00a0Massachusetts relocation, making for a less impressive net gain of 758\u00a0Bay State businesses over 17 years.<\/li>\n<li><strong>Taxes Aren&#8217;t Everything<\/strong><br \/>\nAt first glance, this seems like economic development heresy.\u00a0 But despite its comparably sweet business tax environment, New Hampshire doesn&#8217;t always win the business expansion war with Massachusetts, either.\u00a0 Take Anaheim, California based <a title=\"Cristek Interconnects\" href=\"http:\/\/www.cristek.com\/\" target=\"_blank\">Cristek Interconnects<\/a>.\u00a0 Cristek designs and manufactures electronic components for the military aerospace industry.\u00a0 When it came time to expand to the East Coast, Founder and President Cristi Cristich says it came down to Nashua, N.H., and Lowell, Mass., &#8220;I was very surprised about the decision working out to be Massachusetts.\u00a0 Because I really thought it&#8217;d be Nashua.&#8221;\u00a0Although Cristich points out the Bay State&#8217;s sales tax exemption on manufacturing equipment, &#8220;If it was only the choice of the tax break, we would&#8217;ve located in New Hampshire.\u00a0 It was a combination of factors.\u00a0 It is still more expensive to operate in Massachusetts than New Hampshire, for sure.&#8221;\u00a0 So what were those factors in Cristich&#8217;s decision?\u00a0 The biggest issue for her was that Lowell has a much larger HUBZone, and a larger HUBZone labor pool than Nashua.\u00a0 <a title=\"Understanding the HUBZone Program\" href=\"http:\/\/www.sba.gov\/content\/understanding-hubzone-program\" target=\"_blank\">&#8220;HUBZone&#8221;is a federal designation<\/a>, meaning &#8220;Historically Underutilized Business Zone.&#8221;In other words, these are poor areas where there aren&#8217;t enough jobs.Lowell&#8217;s HUBZone is much larger than Nashua&#8217;s.\u00a0 So, for a government contractor like Cristek, it&#8217;s just good business.\u00a0 As Cristich explains, HUBZone-certified businesses are among those that get preference in the government bidding process, &#8220;The defense industry has contracting goals, subcontracting goals to deal with a certain amount of small business, a certain amount of woman-owned business, a certain amount of veteran business, and HUBZone is another designation that they have goals that they strive to reach in their subcontracting goals.&#8221;\u00a0 And Cristek isn&#8217;t the only defense contractor that&#8217;s expanded to the Lowell-Lawrence area, or relocated there from New Hampshire. According to the Massachusetts Executive Office of Housing and Economic Development, the companies vary in size, and include Goodrich ISR, Suntron, and Cobham Defense Systems.<\/li>\n<\/ul>\n<ul>\n<li><strong>New Hampshire does actually have an income tax<\/strong><br \/>\nBut the key difference between New Hampshire and other states is that the tax burden doesn&#8217;t fall on the workers, but to the businesses that employ them.\u00a0 It&#8217;s called the Business Enterprise Tax, and it&#8217;s levied on wages, salaries and dividends.\u00a0 (State agencies and non-profits are exempt.)\u00a0 Last spring, the Federal Reserve Bank of Boston published a r<a title=\"How Does New Hampshire Do It? An Analysis of Spending and Revenues in the Absence of a Broad-based Income or Sales Tax\" href=\"http:\/\/www.bostonfed.org\/economic\/neppc\/researchreports\/2011\/neppcrr1101.pdf\" target=\"_blank\">eport by the New England Public Policy Center on New Hampshire&#8217;s unusual approach to business and taxation<\/a>.\u00a0 The BET was instituted in part because a few establishments were paying the bulk of the Business Profits Tax.\u00a0 Report author Jennifer Weiner found that although the BET is supposed to be a revenue-neutral fair tax, and it&#8217;s a lower rate than a standard income tax, the state has raised it.\u00a0 From FY 1997-2007*, New Hampshire raised the BET&#8211;and the Profits tax&#8211;at least once.\u00a0 (During that time, the state also raised taxes on meals and rooms, tobacco, real estate transfer and communications.)\u00a0 And it&#8217;s been worth it.\u00a0 In FY 2007, Weiner reported the BET raked in slightly less for the general fund than liquor and tobacco taxes.\u00a0 But combined, the BET and BPT accounted for more than a quarter of education and general fund revenues.<\/li>\n<\/ul>\n<ul>\n<li><strong>We\u2019re not #1<\/strong><br \/>\nAlthough there\u2019s no sales or broad-based income tax, the best tax climate for businesses, <a title=\"Background Paper: 2011 State Business Tax Climate Index\" href=\"http:\/\/www.taxfoundation.org\/files\/bp60.pdf\" target=\"_blank\">according to the Tax Foundation, is actually South Dakota<\/a>.\u00a0 That state has no individual income tax <em>or <\/em>corporate tax.\u00a0 New Hampshire ranks at a respectable No.7.\u00a0 And at No. 32, Massachusetts isn\u2019t nearly as close to the bottom of the biz-friendly barrel as Connecticut (No. 47), Rhode Island (No. 42) or Vermont (No. 38).\u00a0 In other words, \u201cTaxachusetts\u201d\u2026not so much.\u00a0 Just more so than New Hampshire.<\/li>\n<\/ul>\n<p>*There\u2019s a methodological reason the Boston Fed paper author used FY 2007.\u00a0 It was a Census year for state governments, and it wrapped-up immediately before the recession, so it\u2019s probably more emblematic of typical taxation and spending behavior in New Hampshire than the past few years.<\/p>\n<p><em>(Editor&#8217;s Note:\u00a0 An earlier version of this story incorrectly reported that New Hampshire raised both the BET and BPT annually. The state has actually raised each of those taxes at least once from FY1997-2007. We regret the error.)<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Are New Hampshire&#8217;s low tax policies helping it attract economic development? The jumping-off point for this post, and a related post from last week, is data on the\u00a0movement of businesses and jobs between Massachusetts and New Hampshire.\u00a0 The image perpetuated by area media more or less fits the mold of a piece in The Boston\u00a0Globe [&hellip;]<\/p>\n","protected":false},"author":28,"featured_media":1478,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[14],"tags":[69,35,84,522,95,93,85,511,97,98,94,104,521],"acf":[],"_links":{"self":[{"href":"https:\/\/stateimpact.npr.org\/new-hampshire\/wp-json\/wp\/v2\/posts\/561"}],"collection":[{"href":"https:\/\/stateimpact.npr.org\/new-hampshire\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/stateimpact.npr.org\/new-hampshire\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/new-hampshire\/wp-json\/wp\/v2\/users\/28"}],"replies":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/new-hampshire\/wp-json\/wp\/v2\/comments?post=561"}],"version-history":[{"count":36,"href":"https:\/\/stateimpact.npr.org\/new-hampshire\/wp-json\/wp\/v2\/posts\/561\/revisions"}],"predecessor-version":[{"id":587,"href":"https:\/\/stateimpact.npr.org\/new-hampshire\/wp-json\/wp\/v2\/posts\/561\/revisions\/587"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/stateimpact.npr.org\/new-hampshire\/wp-json\/wp\/v2\/media\/1478"}],"wp:attachment":[{"href":"https:\/\/stateimpact.npr.org\/new-hampshire\/wp-json\/wp\/v2\/media?parent=561"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/stateimpact.npr.org\/new-hampshire\/wp-json\/wp\/v2\/categories?post=561"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/stateimpact.npr.org\/new-hampshire\/wp-json\/wp\/v2\/tags?post=561"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}