U.S. Sen. Jeanne Shaheen (D-N.H.) has endorsed fellow Democrat Joyce Craig’s plan for an income tax on interest and dividends, a move some Republicans are calling a throwback to her failed 2002 campaign.
On Jack Heath’s radio show Tuesday morning, Shaheen was asked about Craig’s decision to make a return of the interest and dividend income (I&D) tax a centerpiece of her campaign for governor.
“It just seems odd to me that anyone running for governor in tax-sensitive New Hampshire, with no income and no sales tax, would openly be talking about a new tax,” Heath said.
“Well, nobody in New Hampshire likes taxes,” Shaheen replied. “But if we want to fund our schools, if we want to have roads and bridges that we can drive on, if we want to have safe commerce, if we want to provide health care, then we have to raise revenue.”
Craig has yet to release the details of her income tax plan, and it’s not mentioned on her campaign website. Shaheen admitted to Heath she’s not clear on exactly what Craig is proposing.
“My understanding is she was talking about a tax on the highest income people, not on your average retiree who’s got Social Security and may have a home or other assets.”
According to 2021 data from the New Hampshire Department of Revenue Administration, of the 71,259 tax returns reporting I&D income, 61 percent paid $500 or less in taxes on it. Given the five percent tax rate at the time, that means they had $10,000 or less in I&D revenue.
Just over one thousand of the filings were from partnerships — many of them small businesses — that paid $1.6 million in I&D taxes in 2021.
During the Greater Manchester Chamber of Commerce debate last week, Craig acknowledged for the first time that she supports the income tax, saying she is “open” to raising the current exemption threshold and hopes to collect $80 million in new tax revenues.
Some Granite State politicos noted the irony of Shaheen embracing a tax hike in a governor’s race.
“The one time Jeanne Shaheen lost was the one time she endorsed a sales or income tax. This is the second time,” Americans For Prosperity Regional Director Greg Moore posted on Twitter.
When Shaheen first ran for governor in 1996, she signed the no-new-taxes pledge. She handily defeated Republican Ovide Lamontagne, and she was reelected after taking the pledge again in 1998.
But during her bid for a third term, Shaheen abandoned the no-tax pledge and, after winning reelection, proposed a 2.5 percent sales tax and a 4.5 percent income tax on capital gains as governor.
Those efforts earned the Democrat the nickname “Jeanne Shaheen, Taxing Machine” during her 2002 race for U.S. Senate against John E. Sununu.
Now she’s endorsing a Democratic candidate for governor’s proposal to impose an income tax on what will be a truly “tax free” New Hampshire when the next governor is sworn in next year. (The state’s I&D income tax will be completely phased out as of Jan. 1, 2025.)
Sen. John E. Sununu’s brother, Chris, is the current governor of New Hampshire and a strong supporter of Republican Kelly Ayotte.
“Joyce Craig continuously surrounds herself with proud tax and spend liberals like Jeanne Shaheen and Maura Healey,” the younger Sununu said when asked about Shaheen’s statements. “The citizens of New Hampshire don’t want to be like Massachusetts with more taxes and more government in their pockets. They want good management, and that’s what Kelly Ayotte will deliver.”
As for Shaheen’s claim that new taxes are needed to pay for schools, roads and other state expenses, Drew Cline of the Josiah Barlett said the state’s senior senator should check her math.
“Sen. Shaheen, like so many other Granite Staters, probably isn’t aware that state revenues have surged to record heights since New Hampshire began cutting business tax rates in 2015. Business tax revenues alone rose by 124 percent. Those revenues helped fund increases in state aid to local governments, including a 15 percent increase in state-adequacy education aid for public schools.
“New Hampshire does not need to reinstate an income tax to fund necessary government services,” Cline added.
During a recent event with Americans for Tax Reform, Granite State Republicans noted that, unlike both Shaheen in 1996 and Republican Kelly Ayotte today, Craig has never taken the no-new-taxes pledge. This despite TV ads in which Craig pledges, “I’ll never allow a sales or income tax” and “I will veto any sales or income tax.”
Asked why she had not signed the no-tax pledge, Craig declined to comment.
“Joyce Craig and the Democrats want to raise taxes and destroy our economic advantage. The last thing New Hampshire needs is higher taxes — especially not a $160 million tax hike on seniors, small businesses, and retirees,” Ayotte told NHJournal.
“As governor, I’ll ensure we live within our means with responsible, balanced budgets. On my watch, there will be no new taxes — period.”
