The state of New Hampshire just reported a massive General and Education Trust Fund surplus of $538.9 million. Business tax revenues for the 2022 fiscal year were $323.2 million above the budget plan and $68 million above the prior fiscal year. All this even as Gov. Chris Sununu and Republicans passed cuts to the state’s business tax rates.

But a new report released by a left-leaning think tank says despite those numbers, business tax cuts hurt New Hampshire’s state revenue, costing “between $496 million and $729 million in revenue due to these reductions.”

The report, from the New Hampshire Fiscal Policy Institute (NHFPI) has free market advocates and local business leaders scratching their heads.

The Boston Globe published a story Wednesday highlighting the report with the headline, “Cutting business taxes did not boost N.H. economy, a new report finds.” But the second sentence of the report reads: “Between State Fiscal Years 2015 and 2022, combined BPT and BET revenues increased 118 percent, more than doubling the revenue collected by these two taxes.”

The Business Profits Tax (BPT) and Business Enterprise Tax (BET) are key drivers of state revenue, given the lack of a sales tax or broad-based income tax. (The state does have a tax on interest and dividend income, but the new budget passed in June phases that out by 2027.)

How is an increase of 118 percent also a loss of up to $729 million in revenue? The NHFPI team created their own model and made estimates based on the theoretical income that could have been collected if business taxes hadn’t been cut. What they don’t estimate, as they acknowledge in the report, is how much revenue would have been lost from businesses changing their behavior if taxes had remained high.

“These analyses do not disprove any type of relationship between economic growth in New Hampshire and the BPT and BET rates, but they do show any economic effects are too limited to explain business tax revenue growth,” the report reads.

Nonsense, critics say, noting that if indeed the GOP-backed tax cuts saved taxpayers $729 million as NHFPI suggests, that’s hardly a “limited effect.”

“New Hampshire has the most efficient government in the country, and it’s ludicrous to say that cutting business taxes hasn’t grown our state’s economy,” Sununu said. “We’ve cut the unemployment rate almost by half since 2015 and currently have the lowest rate in the country. We have the lowest poverty rate in the country. We’re ranked third in the country in median household income.

“Because so many businesses have relocated to New Hampshire, the total amount of business taxes collected has increased by 126.5 percent since 2015. Our overall revenues, which are largely based on economic output, have increased by 41.9 percent since 2015,” Sununu added. “The results of our business-friendly policies speak for themselves.

The Business and Industry Association took a more conciliatory tone in a statement.

“BIA believes there can be a reasonable discussion over the value and impact lower business taxes have as an economic driver versus the potential for ‘lost’ tax revenue from lowering tax rates. What is beyond dispute is that New Hampshire, which once had the highest business tax rates in the country, now has rates that are far more competitive, especially with our neighboring New England states,” the BIA said.

“What is also beyond dispute is that in every year the phased-in tax reductions took place, revenue from business taxes not only increased but significantly eclipsed budgeted revenue expectations.”

The NHFPI also points to economic modeling from Moody’s Analytics to credit welfare spending with much of New Hampshire’s economic growth. The Moody’s model “estimated each additional dollar in food assistance through the Supplemental Nutrition Assistance Program (SNAP) in the first quarter of 2021 would have boosted the size of the overall economy by $1.61 by the end of 2021.”

Again, critics scoff at the premise, noting that NHFPI admits New Hampshire has the nation’s lowest poverty rate — and, therefore, a relatively low rate of SNAP benefit payouts.

Where is this push to dismiss the economic impact of low-tax policies coming from? Particularly when the states with the fastest-growing economies (Idaho, Tennessee, Florida, Nevada, and Texas) are among the lowest-tax states in the country.

The NHFPI, which generated the report, says its mission is to “promote equitable, responsible, and sustainable fiscal and economic policies.” In pursuing that mission, it “collaborates” with the progressive States Priorities Partnership. (“The fight for a just and equitable America is underway in the states, and the State Priorities Partnership is leading the way.”)

State Senate President Jeb Bradley says progressives are entitled to their own opinion but not their own math.

“Since we started cutting business taxes, revenue has exceeded expectations. Our economy has grown; we’ve retained businesses and added more,” Bradley said. “Of course, taxes aren’t the only thing companies look at — there’s energy and workers comp costs (which have come down) and health care costs, which we’ve stabilized in this last budget.

“But the proof is in the pudding,” Bradley said.

Taxes will likely be at the center of next year’s statehouse elections, particularly the governor’s race. Manchester Mayor Joyce Craig stumbled on the business tax question during a recent WMUR interview. She was forced to issue a statement afterward declaring she would not raise business taxes. However, Democrats in the legislature have fought against lower business taxes going back to the era of Gov. Maggie Hassan, who vetoed the budget in 2015 over business tax cuts she opposed, forcing the state to operate for months on a continuing resolution before members of her own party forced her to back down.

Drew Cline of the free market Josiah Barlett Center for Public Policy writes that the budget impact of the lowered business taxes is impressive.

“Looking back to 2012, it’s remarkable how state General and Education Fund revenues have grown. Total revenues for both funds were $3.23 billion in the 2022 fiscal year. In 2012, they were $2.16 billion,” Cline said on the JBC website. “Inflation (using the national Consumer Price Index) can account for $663 million of that $1.068 billion revenue increase. The rest, about $404 million, is new money.”

And the purpose of that new money, Sununu says, is to meet needs and improve outcomes for Granite Staters.

“By cutting taxes and being pro-business, were able to not only support our existing programs, but invest in new cutting-edge ideas that have really been able to turn the tide in the mental health in the opioid crisis,” Sununu said Wednesday.

“Economic success is the key to programs and opportunities for vulnerable populations.”