Wednesday, January 23, 2013

Massachusetts set to Raise Taxes – New Hampshire Rejoices!

While Massachusetts Governor, Deval Patrick is set to draw up a new budget that will include a substantial hike in the state income tax(Mass Live), New Hampshire is anticipating an increase in new businesses moving to the Granite State.

From New England Cable News:

Granite State watchdog groups said that goes for businesses, too. Deval Patrick's proposal to raise his state's income tax by a full percentage point will likely revive New Hampshire's efforts to get companies to move north, in spite of oft-criticized business taxes.

Arlinghaus said companies will turn to tax attorneys and ask, “What are things really like north of the border?”

“It doesn’t guarantee people come here,” he said, “but it guarantees they take a look at coming here.”

Especially as New Hampshire's legislature considers a bill that would double the limit on the research and development tax credit from $1 million to $2 million.

“They understand that as businesses need to increase their profitability and spend more money in research and development, [it] will allow them to hire more people,” Lewandowski said.

Even Democratic New Hampshire Governor Maggie Hassan coyly told the New Hampshire Union Leader that if Patrick's "approach leads to an economic boost for us, then I welcome it."

For decades the State of New Hampshire has been the number one destination for those Massachusetts residents and businesses that are seeking fewer taxes and less government interference in their daily lives (although many of those that immigrated north, brought along their Massachusetts values, much to the chagrin of certain residents). However, the fact that the new Democrat Governor is pleased that Patrick is pushing Massachusetts towards yet another loss of income to the Commonwealth, speaks volumes. The fact that the Bay State has already lost population resulting in a loss in one Congressional District, and at least four consecutive revenue losses, one might think the idea of attracting new taxpayers would be foremost in Deval Patrick’s mind. No so, he is intent on “Government helping people help themselves, by taking more from those working in order to try and support those who are in need. One novel approach would be to cut taxes, which would allow those who have extra income to spend, and keep businesses in the state, along with attracting new business. Building a train is fine, as long as one can guarantee that the train will run more than once a day at a cost equal to that of a bus, and have enough of a population to use the system in the first place. “Investing in education” is fine as well, as long as one has the tax base to support the “investment”. Adding an additional burden to those already maxed out with taxes is akin to pushing them onto a train – north to New Hampshire or west or south to more tax friendly states. A tax-cut from Patrick is highly unlikely in any scenario – more tax increases in the two remaining years, to continue to try to “increase state revenue”, are more likely.

Interesting Links from the Tax Foundation: Tax Foundation study on migration out of Massachusetts

Tax Foundation 2013 Business Tax Climate – See New Hampshire in top 10 friendly states – Massachusetts at 22nd out of 50 in business climate, study concluded in 2013 - prior to Govenor Patrick’s decision to increase taxes.

Note: Loss of Business results in fewer jobs, and possible lost jobs, which is a double whammy to the Bay State’s revenue – (The only income Massachusetts has are the taxpayers) – this may result in loss of services (police, fire, teachers) as well as a cut in state entitlement programs.

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