The Stunningly Narrow Definition of Fair Taxation

I ran across this article just yesterday. In it, the Union Leader of Manchester, NH, reported on the perceptions by local New Hampshirites about the fairness of the vehicle fees charged by the state. To be fair, when I first moved from Norwich, Vermont to Lebanon, New Hampshire almost six years ago, it was a shock the first time I had to pay the fee. However, as I looked at how New Hampshire's tax structure was set up it made more sense.

First, there is no income tax at all. Second there is a minimal sales tax; nothing broadly applied for all purchases but instead to meals, hotels, gasoline and liquor. In short, a set of sales taxes designed for the tourist to our state. Third, the lion's share of the tax revenue too the state at 61% comes from property taxes. And finally, we get hit pretty hard for vehicle fees.

As I read over the comments from people reacting to the article it struck me how little most people seemed to understand how we stand versus the rest of the country as far as taxation is concerned.

First, we are one of the wealthiest in this country by income and also have one of the lowest tax burdens in the country. New Hampshire is nationally ranked at or near the bottom in terms of tax burden (state and local). Whether by total taxes raised in the state (44th lowest), per capita (around 46th lowest) or as a portion of the local GDP (47th lowest). Since propert tax is the only "broad-based" tax in the state, we rank in the top 5 for property tax burden - an easy target, but if you reduce that where do you make it up? In addition, New Hampshire ranks 7th highest in the nation in median income and around the 6th lowest in total taxes.

So how come people in NH seem to complain bitterly about how little they have? It's certainly possible that the income is distributed rather unevenly throughout the state so that the proportion of one's income that has to be used to pay property taxes varies wildly. But there also seems to be a pervasive perception that almost anything the state government takes is too much.

I think it would be more productive to start the conversation with questions such as, "What do you think the state as a whole should look like? What infrastructure do we need? What services do we need? How do we make paying for all of this as equitable as possible? How do you think not paying for the upkeep of roads will affect the safety of your travel? How do we get the most value out of the taxes we pay?" From my examination of the history of this state over the last couple of decades, there seems to be more interest in finding ways of shifting costs - pretending we don't really have them by moving them out of the debit column - than in addressing them. Health care costs too much? Shift costs from employers to employees. Not that employees should not be sharing the burden, but this has not reduced the cost of health care, it has simply reduced the effective salary paid to someone by removing that cost from the overhead paid by an employer. And reducing benefits will reduce costs, but will also have an effect on the ability of the employee to pay attention to work if they are worried about their family receiving appropriate care. These are connected issues and shifting costs does not fix anything, it is simply an attempt to sweep them under a rug so that shareholders don't see them.