Rep. Joe Sweeney comments on New Hampshire’s remaining tax on income.
His comments were posted to Politics at NHJournal on April 03, 2023.
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As a Granite Stater who seeks to govern the New Hampshire way and find practical solutions to our most pressing policy problems, I believe that we have a responsibility to create an environment that encourages economic growth, attracts new businesses and residents, and supports those who call our state home. One important step toward achieving these goals is eliminating the Interest & Dividends Tax, making New Hampshire truly income tax-free.
In the last budget adopted two years ago, we began a 5-year phaseout of the Interest & Dividends Tax to hit zero percent in Fiscal Year 2027. In the proposed bipartisan House Budget to be voted on this week, we accelerate that phase out to this biennium in Fiscal Year 2025. That means on January 1, 2025, New Hampshire will be truly income tax-free under the current House budget proposal.
The Interest & Dividends Tax is exactly what it sounds like – a tax on certain types of investment income derived from interest or dividends paid from an investment. Although New Hampshire is often touted as an income tax-free state, the Interest & Dividends Tax is a notable exception. This tax unnecessarily burdens retirees, investors, and businesses, limiting the potential for economic growth and development in our state.
New Hampshire is home to many retirees and those living on a fixed income. These individuals rely heavily on their investments to support themselves and their families. However, the Interest & Dividends Tax discourages savings and investing, limiting the potential for financial growth and security. Eliminating this tax will encourage more people to save and invest, ensuring that they have the financial resources they need to enjoy their retirement years.
Moreover, becoming truly income tax-free will make New Hampshire more attractive to retirees and those living on a fixed income. People on fixed incomes have limited financial resources and need to make every dollar count. By eliminating the Interest & Dividends Tax, we can make New Hampshire a more affordable and welcoming place for retirees and those living on a fixed income. This will also help to ensure that they can live their golden years with financial security and independence.
In addition to supporting retirees and those living on a fixed income, eliminating the Interest & Dividends Tax will also make New Hampshire more attractive to businesses. Businesses, particularly small businesses, are the lifeblood of our economy. They create jobs, generate revenue, and help to build vibrant communities. However, high taxes and regulatory burdens can make it difficult for businesses to succeed. By eliminating the Interest & Dividends Tax, we can create a more tax-friendly environment that encourages business growth and development.
Furthermore, New Hampshire is home to a growing number of young professionals and families. These individuals are looking for a state that offers opportunities for career growth, quality education, and a high standard of living. Eliminating the Interest & Dividends Tax will help to attract these individuals to our state by creating a more attractive and affordable environment.
It is also important to note that eliminating the Interest & Dividends Tax will not create a significant budget shortfall for our state. The revenue generated by this tax represents a relatively small portion of our state’s overall budget. Moreover, the potential economic growth and development that will result from eliminating this tax will more than offset any potential revenue losses. Further, we cannot get into the trap of viewing a tax cut as a loss of revenue. Tax cuts are not expenditures; they are economic stimuli, and giving people back more of their hard-earned money should be celebrated, not vilified.
In fact, other states that have eliminated their income taxes, such as Texas and Florida, have seen significant economic growth and development as a result. By following their example and becoming truly income tax-free, New Hampshire can only further position itself as a leader in economic growth and development in the Northeast.
Eliminating the Interest & Dividends Tax is a necessary step toward creating a more vibrant, dynamic, and attractive New Hampshire. By doing so, we can encourage more savings and investing, create a more tax-friendly environment for businesses, and attract more young professionals and families to our state. I urge my fellow lawmakers to consider the benefits of accelerating this tax elimination and work towards making New Hampshire truly income tax-free.
Rep. Joe Sweeney lives in Salem, NH and represents Rockingham District 25.
Posted by GST Chairman Ray Chadwick