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The following guest commentary was originally sent as a letter by the author to New Hampshire Rep. Robert H. Rowe of Amherst.
IT IS SAID that if we ignore the lessons of history, we are doomed to repeat the mistakes of the past. This week you will be voting on an issue that will have an impact on our state long after we are gone. It is imperative we maintain our unique New Hampshire advantage.
While I want a permanent funding solution for public education, the concept of implementing a new tax to reduce property taxes is a flawed and a failed concept, as I will describe. My family and I moved to Amherst in 1999 from a state which went through the exact same thing we are experiencing here in New Hampshire. The state we came from was New Jersey.
At one time, New Jersey enjoyed a tax structure similar to our current tax structure, no sales or income taxes, but high property taxes, as this was the sole funding source for public education. In 1965, then Gov. Richard Hughes, a Democrat, pushed through a 5 percent sales tax that would be used as a funding source for public education and thereby reduce property taxes, but had no provision dedicating those revenues to education. It slowed the growth in property taxes, which continued to increase. In the early 1970s the rate was raised to 6 percent, as the state needed additional "general" revenues to fund state operations.
In 1971, the New Jersey Supreme Court ruled that the funding of public education through local property taxes was unconstitutional and ordered the state to come up with a new funding plan. Various proposals were put forth through the early 1970s, none of which became law. Finally, in early 1976, the court ruled if a new funding proposal was not in place by July 31, 1976, they -- the court -- were shutting down all public schools in the state on Aug. 1, 1976.
I hope this is now starting to sound "familiar" to our situation. Under this "mandate" the legislature passed, under pressure from another Democratic governor, Brendan Byrne, a flat income tax of "only" 2 percent. As the years have gone by since 1976, the tax rate increased to a now graduated income tax rate of 6 percent, on a taxable income of approximately $ 60,000 with minimal deductions/exemptions.
After we received our first Amherst property tax bill, I compared it to the last property tax bill from the community we lived in New Jersey, which is similar to Amherst in population, school size and income demographics. The rate per thousand of assessed value on both bills was exactly the same. My wife and I prefer our current low tax structure, not another New Jersey or Taxachusetts high tax environment. What is important is the quality of education our children are receiving. We have two children in the Amherst school system, one in sixth grade and the other in third. Overall my wife and I are extremely pleased with the quality of the education our children are receiving here. This satisfaction is based upon the emphasis on fundamentals in learning.
A sales tax is a regressive tax, one that has a greater adverse impact on families with lower incomes, regardless of what is and is not subject to a sales tax. Furthermore, if a sales tax were to be implemented and the statewide property tax reduced, this would increase the federal tax burden for homeowners who itemize on their federal tax return due to a lower deductible property tax.
My suggestion to solve this matter is twofold:
A constitutional amendment that takes the courts out of this matter. There is no funding solution that will pass muster with the court. The views of three people cannot be allowed to change the tax structure of this state as their ruling was intended to do.
State government is "living" beyond its means. With the economy slowing down, the state must reduce spending. The governor's proposed biennial budget is approximately $ 6 billion. An across the board 10 percent spending cut in every budget category should result in a small budget surplus which can be set aside as a fund for future use.
Government does not need another pathway to the wallets of New Hampshire's citizens. Concord cannot be allowed to control public education via the checkbook.
I urge you to vote against any proposed new tax: sales, income or consumption tax.
-- David J. Citarelli, a resident of Amherst, is a member of Citizens for a Sound Economy.