I agree with the comment by several posters that the real issue with high taxes is the level of spending. It is interesting that the prescription for New Hampshire is that an income and/or sales tax will “heal” the problems we have. However, many states have property taxes, income taxes, and sales taxes and have spent themselves into near bankruptcy until the voters rebelled in on form or another and put caps in place. When you look at the actual financial impact of many of these caps it was a freezing of growth in expenses not a cut. But all the special interests begin to moan and wail and predict the end of civilization.
Another thing to consider is that the reason that New Hampshire spending is kept under control is BECAUSE of its tax system. Because the state government doesn’t have access to very much money (most state money is education directed) it can’t be lobbied to spend money it doesn’t have. This would all change with a sales or income tax. Lobbyists would flock to the now well endowed state government with essential spending needs. Local folks would have the common sense to say “Well, that would be a good idea but we just can’t afford it”. Unfortunately, legislators seem to lose their common sense and spending restraint when they are elected.
Observations:
1.Spending by government will always expand to more than what is available through the current tax structure thereby creating the impression that MORE taxes are needed.
2.Reduction of taxes is almost impossible and is accompanied by major guilt trips from anyone impacted in the slightest. Any reductions are usually minor and temporary.
Lessons learned:
Never give government any more that is absolutely necessary and if possible provide the money in a form that absolutely expires at a specified time or can only be increased through a supermajority or constitutional action. Keep spending control as local as possible.
Before we consider the California fix, or other such similar adjustments consider the information at the following link.
http://www.taxfoundation.org/files/sr153.pdf
To summarize, California (Vermont , Maine, New York, Connecticut, RI, NJ) are in the highest 12 states in the country for local and state tax burden and New Hampshire is next to lowest in the country. These are not the people I would look to for a tax solution.
In addition, the California tax structure smacks of an “I’ve got mine” solution. Dickie B states “Everyone in CA that voted for prop 13 knew that there would be that inequity.” Well, OK, but does that make it fair? Long term owners paid a relatively small amount for their property and now have an extremely valuable asset, often in excess of a million dollars, and pay $1000 yearly in property taxes. Newcomers have to pay inflated real estate prices and $9000 in yearly property taxes. A significant amount of the sub prime mortgage failures are coming from California. Any guesses why? Maybe new owners can’t afford the $200,000 down payment on the inflated real estate and are forced into the sub prime market. Then they are overwhelmed by property taxes that are 10 times that of their wealthy neighbors (plus income and sales taxes). But the people that were there first are happy. They are land wealthy and shielded from property taxes. I’ll bet that they are happy to approve local spending increases as well. They can get 100% of any service increase and only pay 10% of the bill. What a great deal. Californians might as well post a sign “Newcomers need not apply (unless you’re rich)”.
People in New Hampshire also decided (knew) that the tax burden would fall on property owners. Many years ago the people who owned valuable property were the “well to do”. They ended up paying the taxes. Everybody was happy. But now, through the growth of value in property, many “common” people are being burdened with real estate assets worth millions. They, whether they like it or not, have become wealthy. The long known policy in New Hampshire is that the property owners pay the taxes in proportion to the value of their property. Is this a surprise? How could it possibly be? Further, if the owners lived in New Hampshire they have had many years without state income or sales taxes. This is not an inconsequential advantage. Also, given a million dollar property appreciating at 3% a year ($30,000) it about equals the property taxes in Laconia. Maybe the kids could help on the taxes for what will be their million dollars plus inheritance. Maybe a reverse mortgage would help?
I live in New Hampshire and own both a primary home and a house at the lake and pay as much in property taxes as I would if there were a 6% state income tax. I picked out our Lake property in Moultonborough specifically because the taxes there were low. Even so, my property taxes have more than doubled in the 13 years we have owned it. Its value has quadrupled. I think it’s a fair deal. I love the Lake and plan on retiring there eventually. However, if I needed to, I could sell the lake house and pocket the money to fund retirement. I don’t think I’ll need to because I’ve planned for tax and cost of living increases. However, you can never tell.
Do I have a guarantee that I get to live at the Lake? If I don’t or can’t pay my tax bill someone else will have to. Is it fair that I can skip out on my bill and they have to pick up my share because I have a house I don’t want to give up?