New Hampshire Business Taxes

1. New Hampshire Business Taxes An Evaluation of the New Hampshire Business Tax Climate

2. Introduction “What Tax Environment promotes jobs, income growth, and environmentally friendly practices?” “Are targeted incentives like Research & Development Incentives an effective way to achieve these goals?”

3. Introduction • Business Tax Environment.. Not Just the Business Profits Tax • Tax Strategies for Economic Growth by Sector • An Exploration of Incentives & Credits

4. Questions When Developing Tax Policy • What are New Hampshire’s Policy Goals? • How can these goals be accomplished through tax policy? • Specific tax bundles • Reallocation of tax revenue • Credit or incentive

5. It’s Not Just About Corporate Income Taxes

6. Taxes affecting Businesses • Business Profits Tax (8.5%) • Generated $305 million in revenue in 2009 • Business Enterprise Tax (0.75%) • Generated $175 million in revenue in 2009 • Comparison: • High compared to surrounding states (ME, MA, VT)

7. Taxes affecting Businesses • Property Taxes • 68% of funding for New Hampshire’s public education • Other Taxes on Inputs • Electricity Consumption Tax • Communications Tax (7.5%) • Real Estate Transfer Tax (1.5%) • Comparison

8. Taxes affecting Businesses • No General Sales Tax • Population of consumers • Elasticity of goods • Meals and Rentals Tax (9%) • Comparison: • Sales Tax Holidays becoming national trend • Meals and Rentals Tax common in Northeast region

9. Taxes affecting Businesses • No Individual Income Tax • Corporate Revenue • Labor Costs • Consumer Demand • Interests and Dividends Tax (5%)

10. Economic Growth Options

11. Research on Tax Reform • No Magic Bundle • for growth in every sector • to make up for revenue lost • Tax Revenue • more effective for targeting certain areas

12. A Picture of Employment in NH Percent of Employment in State

13. A Picture of Businesses in NH (20,169) Number of Employees State Wide (6,438) (4,038) (2,779) (886) (509) (144) (67) (35) Number of Employees in Company

14. Chart 1. Tax Structure and Business Promotion Current Tax Bundle High High Low Low Friendly Overall! New Business Plant Locations Revenue Used for Education and Infrastructure BPT ↑.85% # of New Plants ↓2-3% No Corporate Tax Relief Programs for Low Profit Businesses Small Business Start Ups Foreign Direct Investment

15. Incentives and Credits

16. Why Incentives? • Alternative method to support policy goals • Easier to adjust • Sharper focus • Encourage specific business behaviors

17. Effects of Incentives • Revenue Generation • No real academic consensus • Social Benefits and Policy Goals • Limited Research

18. Current New Hampshire Programs • Innovative Business and Job Creation • Research and Development Tax Credit • Workforce Retraining • Job Training Fund • Encouraging Investment in Specific Regions • Coos County Job Creation Tax Credit • Economic Revitalization Zones

19. Innovative Incentive Programs • Green Industries Tax Credit – Delaware • Business Energy Tax Credit – Oregon • Employment Growth Incentive – Vermont

20. Conclusion • New Hampshire is currently relatively business friendly • Taxes balance out positively • Simple and effective incentive programs • What types of business does New Hampshire want? What types of business should its tax policy cater to? • Use the answers to determine ideal relative tax levels