In Fiscal Year (FY) 2016, New Hampshire collected $6.5 billion in state and local taxes—or $4,879 for every man, woman, and child. While this is an impressive sum of money, it tells us little about whether or not the average New Hampshire taxpayer can afford this level of taxation?
To better answer this question, this analysis will calculate New Hampshire's tax burden relative to the private sector. Ultimately, it is the private sector that creates new wealth and income. A high tax burden means a state is hobbling its private sector relative to other states and reducing their long-run economic growth potential.
Fortunately for taxpayers, as shown in Chart 1, New Hampshire’s state and local tax burden (tax collections divided by private sector personal income) was the fifth lowest in the nation for FY 2016 at 11.6 percent—or -19 percent below the national average of 14.3 percent.
#NewHampshire state and local #taxburden in FY 2016 was the 5th lowest in the nation at 11.6%— -19% below US average of 14.3% http://bit.ly/2FX9C8F @keypolicydata #NHpolitics #NHgov #PolicyData (click to tweet)
As shown in Chart 2, New Hampshire’s tax burden has increased over time by 41 percent to 11.6 percent in FY 2016 from 8.2 percent in FY 1950.
As shown in Chart 3, New Hampshire’s 11.6 percent tax burden is greater than these combined industries: manufacturing (10.4 percent) and arts, entertainment, and recreation (1.0 percent).
But wait, there’s more!
Did you know that #NewHampshire is home to the few remaining #taxhavens in the country! No state and local personal #incometax, no state and local #salestax, and no/low #propertytax http://bit.ly/2FX9C8F @keypolicydata #NHpolitics #NHgov #PolicyData (Click to tweet)
There are 16 jurisdictions where one can live free of personal income, sales, and town property taxes (see Google Map below): Atkinson & Gilmanton Academy Grant, Bean’s Grant, Bean’s Purchase, Cambridge, Chandler’s Purchase, Crawford’s Purchase, Cutt’s Grant, Dix’s Grant, Erving’s Grant, Hadley’s Purchase, Kilkenny, Livermore, Low & Burbank Grant, Martin’s Location, Sargent’s Purchase, Second College Grant.
There are other towns (not shown in Google Map), such as Dixville, Hale’s Location, Millsfield, and Success, to name a few, that have very low town property taxes with a mill rate under 10.
On the downside, all of these towns are still subject to county property taxes. And thanks to recent ruling by the State Supreme Court on education funding (known as the “Claremont Decision”), there is also a state-wide property tax. The rate is generally set at 2 mills (depending on the town), so it’s not too onerous (yet). You can view a complete breakdown of New Hampshire property taxes by jurisdiction.
Of course, there is a minor problem in that if you want to move to one of these tax havens—many of these towns are remote and/or mountainous with few people or are now mostly national forest. Neither homes nor land come up for sale very often and when they do they command a price premium. One notable exception is that you can buy into Hale’s Location thanks to the development around its country club.
After New Hampshire, Alaska comes the closest to tax haven status by virtue of no state-wide personal income or sales tax. However, Alaska does allow towns to levy their own sales tax—which is the equivalent to a state-wide 1.76 percent sales tax according to the Tax Foundation. Although this can be offset by the annual Permanent Fund Dividend payment which we book as a tax reduction.
Additionally, New Hampshire is home to the only state-level flat tax in the country known as the Business Enterprise Tax. I have written a tax plan to fully reform New Hampshire’s business tax system into a single rate, Business Flat Tax (pdf) that would completely eliminate the extremely onerous Business Profit Tax (pdf), among other changes. You can read more about it in my post: “State and Local Business Taxes 2014”
Of course, the tax burdens for local government can vary just as much as they do among the 50 states. As such, we have also calculated the local government tax burden for every county in New Hampshire—this includes every taxing jurisdiction within the geographic county borders whether it is a city, a special district, or county government itself.
New Hampshire only has 10 counties and are listed below from highest to lowest local government tax burden:
Finally, don’t forget to watch our exclusive time-lapse video of state and local tax burdens over the last 66 years! See if your state has been above or below the national average?
Scott has nearly 20 years of experience as a public policy economist. He is the author, co-author and editor of over 180 studies and books. His professional experience also includes positions at the American Conservative Union Foundation, Granite Institute, Federalism In Action, Maine Heritage Policy Center, Tax Foundation, and Heritage Foundation.