“There’s no education in the second kick of a mule,” the saying goes. Are New Hampshire Democrats about to take another one in the teeth?
Democrats on the Senate Finance Committee Wednesday voted against tax cuts for businesses, individuals, and the hospitality industry — a tax-hike trifecta. House Democrats did the same earlier this year. By doing so, they’re adding to the unbroken track record of Democrats opposing tax relief going back to (at least) 2018.
And, critics say, it’s a sign they didn’t learn their lesson after losing control of the state legislature in 2020.
In the committee meeting, Democrats on the Finance Committee tried to kill a meals and rooms tax cut (from 9 percent to 8.5 percent), reductions in the business profits tax and business enterprise tax, and they opposed eliminating the 5 percent interest and dividends tax.
The latter is particularly significant. If it passes, New Hampshire will become truly “income-tax free” for individuals.
Republicans were happy to both pass these tax cuts through committee by a 5-2 vote and to let their partisan counterparts cast votes for higher taxes.
Democrats were unable to argue the GOP tax cuts pose a revenue risk to the state. Despite the devastation of the COVID-19 lockdowns and the damage wreaked on New Hampshire’s restaurant and hospitality industry in the past 12 months, state revenues continue to exceed expectations.
In April, the state Department of Administrative Services reported tax receipts above $434 million, more than $84 million more than projected. Business taxes were $73.8 million above the state’s original estimates and $140 million higher year to year.
“When revenues are higher than expenses, and they keep trending up, the right thing to do is cut taxes,” House Finance Committee Chair Rep. Ken Weyler (R-Kingston) told NHJournal. “Democrats just don’t see it that way. If they’ve got a logical reason for supporting higher taxes, I haven’t heard it.”
The voters, however, are apparently hearing the Democrats’ message on taxes. Loud and clear.
New Hampshire’s state Democratic Party had one of the worst performances in the country last year, losing control of both houses of the legislature even as Joe Biden and the federal Democrats were sweeping into victory. And political observers believe one key reason was the tax issue. Democrats repeatedly embraced tax increases — most notably a wage tax to fund a paid family leave mandate.
Republicans portrayed it as an “income tax,” while Democrats claimed it was merely an insurance premium. (Both claims failed the NHJournal’s fact checks.)
As one NHGOP strategist told NHJournal: “The tax issue was extremely strong for Republican candidates last year. It was so strong it was able to penetrate the noise of the national campaigns – even one featuring Donald Trump — and convince swing voters in New Hampshire they needed to make a change.”
Democrats also used their majority in 2019 to try and undo scheduled cuts in business taxes, claiming they benefitted “big, out-of-state corporations.” Republicans, with a Sununu veto threat as a backstop, were able to keep the tax cuts in place.
On Wednesday, Democrats returned to a similar script.
“Today, Republican members of the Senate Finance Committee pushed forward a series of fiscally irresponsible tax cuts to primarily benefit large out of state corporations that will jeopardize New Hampshire’s state revenues during a period of financial recovery following the unprecedented economic impact of the COVID-19 pandemic,” Senate Democrats said in a press release.
Senate Democratic Leader Donna Soucy (D-Manchester) said the state should consider “providing direct assistance” rather than lowering taxes. “Direct assistance” is often used as a euphemism for welfare payments.
Is supporting increased government benefits and higher taxes smart policy? That’s debatable. But is it smart politics in New Hampshire? It certainly wasn’t in 2020.
Rep. Len Turcotte (R-Barrington), senior advisor to the Republican caucus, believes the tax issue was very important to his party’s success last year, and that it hurt Democrats down the ballot.
“Rather than looking for ways to spend this year’s increased revenue, we are choosing to decrease BET and BPT (which lowers costs for businesses that can be passed along to Granite Staters) and phasing out the interest and dividends tax to allow our retirees to remain in our state rather than flee to Florida and other states without those taxes,” Turcotte said.
“We Republicans look for ways to reduce taxes with an anticipated revenue increase. Democrats look for ways to spend it, while continuing to call for an income or sales tax to allow for even more bureaucracy.”
New Hampshire Democrats would certainly dispute that claim. But it’s hard to dispute the impact repeatedly voting against tax cuts has on the perception, fair or not, that they’re the “tax-and-spend” party of New Hampshire.