NH was ranked 7th most tax friendly state for business (2010) by Tax Foundation, noting the lack of a sales tax. Taken into account were individual income taxes, major business taxes, sales taxes, unemployment insurance taxes, and taxes on wealth or assets such as property.
The NH Fiscal Policy Institute summarizes some factors to consider when thinking about changes to business taxes:
State business taxes have relatively little effect on business decision-making.
Business taxes in New Hampshire are already lower than in most states. When all taxes paid by businesses are tallied, NH’s figure was 4.2% (2012), less than 38 other states.
Close to a third of all businesses filing a tax return owed zero BPT and BET in 2011.
Business tax cuts do not pay for themselves. Changes in corporate income taxes may yield some additional economic activity, but usually only enough to replace 15 percent to 25 percent of the initial revenue loss associated with such changes. What’s more, two of the key mechanisms by which a state may recoup a portion of a given tax cut are not present in New Hampshire, as the state lacks both a broad-based sales and income tax.
Business tax cuts, if not offset by increases in other taxes, will lead to reductions in the public services on which both residents and businesses rely. Dropping the BPT rate from 8.5 percent to 7.4 percent, once fully implemented, would reduce tax revenue by as much as $90 million per biennium.