Concord Monitor, Friday January 25, 2008
My Turn
Only answer: tax reform
Bills should be based on the ability to pay
By Rep. Jessie Osborne
For the Monitor
Congratulations to the Monitor for its excellent Jan. 19 editorial ("Commission should step off the treadmill"). You are absolutely correct that if the commission charged with arriving at the cost of an "adequate education" comes up wih an artficially low figure and the Legislature adopts it, the education funding issue - the great issue of our times in New Hampshire - will be headed back to the courts.
Some seem to believe that we can just delay, and delay more, on meeting the challenge of the Claremont lawsuit rulings. I believe something must be done now, and that Democrats were elected to majorities in both the House and Senate at least in part so that a permanent solution could be brought about.
That is one main reason I introduced House Bill 1593, taking on this issue from a revenue basis. The other main reason for this bill is to address the obvious and growing problem that over-reliance on the property tax is creating for the New Hampshire economy.
HB1593 establishes a combination statewide "enhanced education" property tax at $5.50 per $1,000 of equalized assessed valuation, with a $200,000 homestead exemption; and a 4 percent educaton income tax with liberal income exemptions and a credit for the statewide property tax the household pays. These taxes replace the current interest & dividends tax, and business enterprise tax, which are both repealed totally; the bill also reduces the business profits tax to 7.5 percent. The bill also contains a circuit breaker (abatement) program fro taxpayers whose total property tax bill (municipal, school, county and statewide property taxes) exceed 8 percent of household income. In short, this bill bases the financing of education on ability to pay.
A homeowner with a property valued at $250,000 would pay a statewide property tax of $275; a homeowner whose property is valued at $500,000 would pay $1,650; a homeowner whose property is valued at $1 million would pay $4,400. Similarly, the income tax paid by a family of four whose federal adjusted gross income is $40,000 would be $0; with an income of $60,000 and a homestead valued at $275,000, the family's state ncome tax would be a net of only $525; with an income of $200,000 and a homestead valued at $500,000, the net state income taxwould be $4,750.
The Department of Revenue Administration prepared a fiscal analysis of this bill, and while I question some of its' assumptions and calculations, DRA concludes that the bill would produce almost $837 million of net new revenue for the state. That is more than double the current education trust fund revenue. This means that the cost of an adequate education can be pegged at a realistic and defensible level, not a lowball figure that backs into the current state revenue raising system.
I wish to thank my co-sponsors - Democratic Reps. Chuck Weed of Keene, James Phinizy of Acworth and Mary Cooney of Plymouth - for their support and work in preparation and presenting this bill. I also thank the members of the House Ways and Means Committee, chaired by Democratic Rep. Susan Almy of Lebanon, for their open-minded reception. Unfortunately no member of the media chose to cover the hearing, and the bill has attracted zero publicity. Perhaps the media has written off such a legislative effort as totall unrealistic and unachievable.
While I am under no illusion that this comprehensive tax reform will become law his year ( a gubernatorial veto would be swift after the unlikely passage of such a measure), the time is well overdue for honest debate over New Hampshire's broken tax system. The future of our state depends on it.
(Rep. Jessie L. Osborne is a Democrat from Concord.)
Concord Monitor, January 25, 2008
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