As the new Republican majority tries to make its way in Augusta, a new bout of New Hampshire envy has broken out.
That only makes sense. Governing is harder work than campaigning. While it’s unfair to assert, as Gov. Paul LePage did upon returning from Jamaica, that the Legislature hasn’t “done a damn thing,” it’s true the pace has been slow.
So New Hampshire-as-Promised-Land has been popular in formats both high and low.
The blue chip report comes from the Federal Reserve Bank of Boston, written by economist Jennifer Weiner. Acting on a suggestion by Sen. Dick Woodbury, one of our brainier legislators, Weiner dug into “How Does New Hampshire Do It?”
The “it” is how the Granite State manages, uniquely, without either a broad-based sales or income tax. (Alaska doesn’t count – its petroleum tax raises as much as most states’ sales and income taxes combined.)
The low-rent version is yet another blast from the Maine Heritage Policy Center, which totes up the differences between Maine and New Hampshire on taxes and regulation and then asserts – without any real evidence – that Maine’s woes are all caused by these differences. The idea that the two states could just be, well, different, seems never to have occurred to MHPC, for whom even Gov. LePage’s budget doesn’t cut spending nearly enough.
It’s tempting, in the face of so much bluster from MHPC about the inequities of Maine and the wonders of New Hampshire, to revive the 1960s slogan of the hard-hatted right against the anti-war left, “America: Love it or Leave it.,” substituting “Maine” for “America.”
But that would not be the Maine way. We tolerate our critics, however histrionic. And besides, Tarren Bragdon, MHPC’s CEO, is indeed leaving for Florida, where he hopes to find greener pastures for conservative think-tanking.
The Federal Reserve study is far more substantial, though it deals primarily with how New Hampshire raises revenue, not how it spends it. The numerous charts and graphs do show that, by and large, New Hampshire does have lower taxes, and spends less per capita than most other states, including Maine.
It does this through a “diverse” blend of revenues, some familiar, some not. We all know about the drive-by liquor stores that attract tourists on their way to Maine and Vermont, and produce a nifty pot of change for the New Hampshire budget. Most of us, unless we’ve lived there, don’t know about the interest and dividends tax, a 5% levy on capital that runs contrary to the current Republican philosophy.
At the federal level, capital gains are taxed at lower rates because, in theory, they produce investment that in turn produces jobs. But New Hampshire doesn’t tax earned income, while it does tax accumulated wealth. The explanation is that the tax was enacted in the 1920s, long before the two major parties adopted their current tax philosophies.
New Hampshire also gains more revenue from business taxes than Maine, through a franchise tax on assets, not income. Weiner’s report sees this as an indirect tax that’s less visible than withholding from weekly paychecks – though it’s still widely resented by New Hampshire firms when complaining about their own state’s business climate.
And, of course, New Hampshire levies far higher property taxes than any other state – even its New England neighbors, which rely on property taxes more than other regions.
Still, New Hampshire does deserve its reputation as a low-tax, low- spending state. It’s interesting, but also, to a great degree, beside the point.
Maine shares very few of the demographic and geographic trends that have boosted personal income in New Hampshire. By far the largest factor behind rapid population growth from 1960-90 in New Hampshire, which has slowed since, was sprawl – the movement out from Boston, New England’s economic hub, caused by cars, commuting and suburbia. Nashua and Manchester are much closer to Boston than Portland, which explains much of the growth difference. And while Portland has become Maine’s economic hub, it’s a much smaller hub than Boston.
None of these things are going to change any time soon – though most economists predict Americans will start returning to cities, partially undoing sprawl, as energy costs continue to climb.
So, while New Hampshire does New Hampshire very well, Maine should also be seeking more ways to be Maine.
Most of us who live here do so for many other reasons than tax levels and regulations. Until we put those factors back into the balance, we’re never going to come up with the right answers.