Crisis after crisis and still the American economy keeps coming back, led regionally by the Granite State of New Hampshire. After suffering tens of thousands of job losses at the height of the pandemic, New Hampshire’s unemployment rate today is an eye-poppingly low 2.9%. These days, the biggest obstacle facing Granite State business owners is finding enough quality applicants to fill necessary positions.
This isn’t by accident. New Hampshire’s dynamic economy is the result of a series of policy choices beginning in the 1970s and continuing to this very day. Back then voters said “no thank you” to the idea of a broad-based income or sales tax, which built the foundation for the economic freedom and prosperity we’re experiencing now.
Fast forward to 2016. That year the General Court began to reduce taxes on employers large and small. Over the course of five years, we’ve cut the business profits tax (BPT) and the business enterprise tax (BET) three times, allowing job-creating businesses and entrepreneurs to expand their businesses and hire more people.
The budget we passed this year best exemplifies this spirit of prosperity and growth. The budget reduces government spending by 3% while still building up our Rainy Day Fund to $156.8 million, the highest level in history. The budget reduces the Meals and Rooms Tax rate to 8.5% to help the hospitality industry that was so severely damaged by the pandemic. It fully phases out the Interest and Dividends Tax over 5 years. And it further reduces the BPT and the BET.
The payoff? New Hampshire is the reigning “most economically free state” in North America, according to the Canadian free-market think tank the Fraser Institute. This truly is a great place to live, work, and raise a family.
Washington, DC provides quite a contrast to Concord, NH. And not in a good way.
The federal government did some good things to rescue small businesses and their employees during the early months of the pandemic. The Paycheck Protection Plan stands out, for example. Much of the activity in Washington these days, however, has little or nothing to do with helping employers and their workers. In fact, it could severely damage the U.S. economy.
For example, one legislative push by extreme members of the Congressional majority would raise taxes on job-creating private investments in small businesses. Two bills – H.R. 1068 in the House and S.1598 in the Senate – would reverse four decades of tax policy to create a tax on business investments, also called “carried interest.” Put in a simpler way: This law would make it much more expensive for private investors to hold a stake in small businesses.
A recent study by the U.S. Chamber of Commerce shows this legislation could cost the U.S. economy 4.9 million jobs over the next five years and reduce government tax revenues by $96 billion over that same period.
Sen. Maggie Hassan represents an important swing vote in the United States Senate on controversial measures like this one. I hope she will remember her New Hampshire roots and oppose this new Small Business and Investment Tax. As we in the New Hampshire Legislature have shown, government won’t create jobs by closing off private investments into the very small businesses that drive our economy.