In New Hampshire, former health commissioner John Stephen yesterday announced his candidacy for governor. In his announcement speech, he stated his opposition to the state’s recent extension of the corporate income taxA corporate income tax (CIT) is levied by federal and state governments on business profits. Many companies are not subject to the CIT because they are taxed as pass-through businesses, with income reportable under the individual income tax. to limited liability companies (LLCs).
At the risk of oversimplifying, LLCs are partnerships that enjoy liability protection, and their income is typically taxed as part of the individual income taxAn individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income. The Federal Income Tax was established in 1913 with the ratification of the 16th Amendment. Though barely 100 years old, individual income taxes are the largest source of tax revenue in the U.S. . New Hampshire’s action is a way to taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. individual income while professing that they don’t have an individual income tax.
Stephen said the foundation ranked New Hampshire as the last state in the nation in business tax climate. A report on the foundation’s website ranks New Hampshire as seventh-best in that category.
Greg Moore, a spokesman for Stephen, said the candidate misspoke about New Hampshire’s business climate yesterday. He said Stephen was referring to the state’s corporate tax index rate, which the Tax Foundation ranks as last in the country. The foundation combines that score with other state tax rankings in putting New Hampshire among the top 10 states in overall business tax climate.
Correct. The State Business Tax Climate Index has an overall rank, and five subranks for corporate taxes, individual income taxes, sales taxes, property taxes, and unemployment insurance taxes. While New Hampshire has the 7th best business tax climate overall, its corporate subindex is 50th, or worst in the country, primarily due to its terrible corporate tax baseThe tax base is the total amount of income, property, assets, consumption, transactions, or other economic activity subject to taxation by a tax authority. A narrow tax base is non-neutral and inefficient. A broad tax base reduces tax administration costs and allows more revenue to be raised at lower rates. .
More on New Hampshire here.
More on state tax policy here.Share