Right to Work, business-friendly Texas offers a sensible alternative to New Hampshire’s high taxes and lack of
incentives for businesses. Andrew Cline has the story in the Wall Street Journal.
Granite State Democrats are spooked by a man more than 1,000 miles away: Texas Gov. Greg Abbott. This summer Mr. Abbott helped clarify a long-standing political debate here when he tried to lure New Hampshire businesses down south. But the free economics lesson he offered seems to have gone right over New Hampshire Democrats’ heads.
The nonpartisan Tax Foundation ranks New Hampshire’s corporate tax burden as third highest in the country—worse even than its neighbors in the famously business-unfriendly Northeast.
The story starts with the Republican legislature’s attempt to cut business taxes. New Hampshire levies no personal income tax or sales tax, which has given it a low-tax reputation. But corporate taxes are high.
Hence Republicans reasoned that a small reduction in the two business tax rates—to 7.9% and 0.675%—over five years would make the state more competitive. Lawmakers passed such a plan in June, at a cost of $21 million this budget cycle.
Legislators also passed a tax-law change requested by Planet Fitness, a national gym chain based in Newington, N.H. Planet Fitness was preparing for an initial public offering on Aug. 6 and expected a big tax bill from the state. New Hampshire taxes companies that go public on the increased value of their shares sold or exchanged. But Planet Fitness threatened to move its headquarters—and take 150 jobs—unless the state changed that system. Republicans included in their budget a provision that would have allowed businesses to skip this tax in exchange for forfeiting related future deductions.
Citing that change and the business rate cuts, New Hampshire’s Democratic governor, Maggie Hassan, vetoed the legislature’s budget package on June 25.
That was the Texas governor’s cue. Four days after the veto Gov. Abbott, a Republican, wrote a letter to Planet Fitness CEO Chris Rondeau inviting him to consider relocating to the Lone Star State. “I’m sure governors from across America are knocking down your door since Governor Hassan vetoed a budget that included business tax cuts,” Mr. Abbott wrote. “But how many of my colleagues just passed a total tax relief package of $3.8 billion like we did recently in Texas?” He sent the letter to seven other New Hampshire businesses, including Sig Sauer, GE Aviation and New Hampshire Ball Bearings. Democrats were not amused.
As New Hampshire’s governor was demonizing businesses that pay the tax, Gov. Abbott was wooing them. To spread the Lone Star economic gospel further, the Texan issued news releases to New Hampshire media after the veto, and then wrote an op-ed for the New Hampshire Union Leader (the newspaper where I work) urging Granite State companies to consider relocating.
Democrats’ response was telling: Instead of trying to poach Texas businesses or promote New Hampshire in return, they belittled Texans.
In the back and forth, the most important economic statistic—each state’s growth rate—has been mostly missed. Since 2009, the year the recession ended, New Hampshire’s economy has grown at an annual rate of 1.8%, just below the national rate of 1.9%, according to data compiled by the Joint Economic Committee of Congress. By contrast, Texas’ annual growth rate during the same period was 4.7%. Since February 2010, the low point after the recession, employment in New Hampshire has grown by 8.1%, in the nation as a whole by 12.1%, and in Texas by 18.7%.
Democrats can insist on maintaining the state’s high business tax rates, and refusing other reforms (such as right-to-work and sunset laws for regulations) embraced by Texas years ago. What they can’t do, when New Hampshire’s economy continues to lose ground to faster-growing states, is act as if no one warned them.
Mr. Cline is the editorial-page editor of the New Hampshire Union Leader.