Live free or . . . move to another state? That’s the question with which New Hampshire companies are grappling, as Democratic Governor Maggie Hassan vetoed a change to the state’s business tax structure that would’ve made New Hampshire friendlier to both large corporations and start-ups alike.
Republican lawmakers are decrying the Governor’s decision as anti-business, and companies are concerned as well. The most public face of this ongoing tussle is Planet Fitness. The successful gym franchise, which is headquartered in New Hampshire, came to lawmakers in Mayrequesting a change in tax law. Essentially, the sought-after change would have prevented Planet Fitness from having to pay higher business-profits taxes when the company goes public (a move it is planning in the near future).
Planet Fitness’ Director of Public Relations explained that the company had been in New Hampshire for 23 years and would like to stay in the state – but cautioned that “we are working with our advisors and board of directors to explore all options regarding the company’s future in the state.” Planet Fitness reported $279.8 million in total revenue for 2014 and operates about 980 clubs nationwide.
Not wishing to play favorites, legislators broadened the bill to affect a variety of businesses, not just publicly held ones. If the bill would’ve made it off of Governor Hassan’s desk, it would have given businesses the opportunity to avoid paying higher taxes on particular gains in value. (If a business chose to not disclose its new value, it would miss out on future tax deductions.) Hassan rationalized her veto by saying that the business tax cuts would result in lost revenue. Critics countered that the real loss would be in businesses that choose to leave the state, as well as businesses that now may not consider opening in New Hampshire.
In a statement in support of the bill, New Hampshire Senate Majority Leader Jeb Bradley said, “This bill eliminates a huge disincentive for start-ups here in New Hampshire. Hundreds of good jobs are at stake, and we want a tax code that attracts start-ups to our state.”
Placing unnecessary roadblocks in front of job-creating businesses is just bad policy. Rather than take this step backward by vetoing the bill, the Governor should want to continue the forward momentum that makes New Hampshire such an appealing place for workers, families, and innovators. At present, the Granite State’s status as a no-income-tax and no-sales-tax state help it land squarely on the Tax Foundation’s top-ten list of states with the best business climate. It routinely gains wealth and population, particularly from its high-tax neighbors (between 1992 and 2011, the state of Massachusetts alone contributed $3.23 billion in net adjusted gross income to the New Hampshire economy).
What’s more, the eyes of the nation will soon be on New Hampshire, given the state’s first-in-the-nation status for the presidential primaries. Undoubtedly, the 2016 presidential contenders will visit New Hampshire multiple times, discussion issues related to tax reform and economic growth. Now is the perfect opportunity for New Hampshire to showcase itself as the pro-growth jewel of New England, with policies that would entice businesses large and small. Otherwise, successful companies and ambitious startups will be looking around for a place where they can truly “live free.”