Democrats, read their lips.
When state Rep. Thomas Schamberg (D-Wilmot) filed legislation reviving the defunct income tax on income and dividends and raising business taxes, Granite State Republicans pounced.
“The Democrats’ plan is tax hikes for all of New Hampshire,” Gov. Kelly Ayotte posted on Twitter/X. “That’s a hell no from me.”
House Majority Leader Jason Osborne offered his own take.
“NH Dems: blow out spending in good times so they can jack up taxes in bad times. NH Republicans: cut wasteful and redundant spending in bad times so we can give people their money back in good times,” he posted.
“We are definitely not the same.”
Schamberg’s bill would reinstate the interest and dividends tax at 5 percent, raises the Business Profits Tax from 7.5 to 8.5 percent, increases the Business Enterprise Tax from 0.55 to 0.75 percent, and bumps up the Meals and Rooms tax on meals from 8.5 to 9 percent.
With a solid Republican majority in the House and a GOP supermajority in the Senate, this tax hike is highly unlikely to pass. But that hasn’t stopped Democrats from making the case for tax hikes.
“We need income, so we don’t need to have tax cuts. We need to have tax increases,” Rep. Chris Herbert (D-Manchester) recently said during a House hearing.
The debate over taxes has been at the center of state politics since last year’s race between Ayotte and her Democrat opponent, former Manchester Mayor Joyce Craig. The latter denounced the decision of Republicans to eliminate New Hampshire’s final personal income tax — the interest and dividends tax — and called for its return. Ayotte celebrated the decision to make the Granite State one of just nine states with no taxes on personal income and pledged not to support any tax hikes.
Ayotte crushed Craig in the general election by nearly 10 points.
Democrats in the legislature, however, continue attacking the GOP’s tax-cutting policies, arguing they “downshift” costs to local property taxpayers with their cuts through their state tax cuts.
“Our state has lost about $750 million in base revenues since 2016 due to tax cuts which were hidden behind multiple federal stimulus packages,” Rep. Susan Almy (D-Lebanon) told NHJournal Thursday. Almy is the ranking member of the Ways and Means Committee, where she serves with Schamberg.
“Those of us who know how to read the numbers, including most of the Republicans and Democrats on Finance and Ways and Means, we are now seeing revenue losses that will continue to grow as the stimulus packages end,” Almy said.
She was echoing comments from Democratic leaders at a recent press conference.
“They (Republicans) recklessly cut sources of revenue when we knew we could not make it up,” said Sen. Cindy Rosenwald (D-Nashua). “It’s a shame that the Republicans never were forthright with the public about what the end of the interest and dividend tax… means in terms of program cuts,” Rosenwald added.
But when asked if they planned to file legislation to restore the I&D tax, Rosenwald and her fellow Democrats responded with a resounding “no.”
Republicans reject the argument that tax cuts have created a revenue crisis for the state, noting the state’s operating budget has risen by $1 billion over the past decade. Since the business tax cuts began, business tax revenues have more than doubled, from $561.7 million to $1.2 billion, the Josiah Bartlett Center for Public Policy reports.
As for “downshifting,” Democrats concede state contributions to local schools and municipalities are at an all-time high.
Republicans say the problem is spending, in particular the last biennium’s budget, which had to get through an evenly-divided House.
Republicans made it clear they are more than happy to continue the debate over tax increases. Just days ago, party leaders held a mock funeral for the interest and dividends tax at the State House, warning Democrats would try to bring it back.
Thursday morning, the state GOP had already sent a fundraising email highlighting Schamberg’s proposal.
By Thursday afternoon, Democrats were crying uncle.
“The House Democratic Caucus does not support a sales or income tax on Granite Staters,” Minority Leader Alexis Simpson (D-Exeter) said in a statement. “In fact, we are actively working to address the skyrocketing property tax increases that have ballooned under years of Republican control.”
Simpson pointed out the tax hike legislation had just one sponsor and no co-sponsors, suggesting that it should not be viewed as representative of the caucus as a whole.
But in the same statement, she also attacked “their (Republicans) 15-week abortion ban,” a bill with just a handful of sponsors that has no chance of becoming law.
Democrats have often claimed fringe legislation with little support, such as a bill calling for New Hampshire to secede from the Union, represents the entire caucus. Party leaders are clearly unhappy that it’s happening to them.
Republicans are unapologetic.
“Nice try,” the state GOP said of Simpson’s statement.
“New Hampshire Democrats made the entire (2024) campaign about bringing back the I&D tax and railing against the business tax cuts we’ve implemented to grow our economy. Your whole caucus did. Your gubernatorial nominee did. You all own this.”
Asked if she would back a tax hike, Almy was circumspect.
“I may or may not vote for any of the various efforts other Democrats have made to try to avoid this disaster,” Almy said.
“I have not put in any efforts to ameliorate this process this year, because I know that we will have to fall apart before the Republican Party, now a Trump Party, is able to understand the disaster they will be causing everyone, even the billionaires that he has surrounded himself with.”