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Report Shows Higher Effective Tax Rates for Residents with Low Incomes

October 18, 2018 Common Cents

Most New Hampshire residents with lower incomes pay a higher percentage of the money they earn in state and local taxes than residents with higher incomes do. In a new report released yesterday, the Institute on Taxation and Economic Policy conducted evaluations of state and local government tax systems in each of the 50 states and modeled their impacts on non-elderly residents. The report concludes that 45 states have tax systems that ask a greater percentage of the incomes of those with low earnings than those with the highest incomes.

New Hampshire is one of those 45 states, in part due to a state and local tax system heavily dependent on property taxes for revenue. The report finds that property taxes usually fall more heavily on lower- and middle-income families in relative terms, as higher income families generally require a smaller percentage of their incomes to pay property taxes than families with lower incomes. New Hampshire’s property tax structure has limited opportunities for lower-income households to reduce their property tax liability, such as the small and underused Low and Moderate Income Homeowners Property Tax Relief program.

For the 20 percent of non-elderly people with the lowest incomes in New Hampshire, which the report estimates are those making less than $26,700 per year, state and local taxes absorb about 9.1 percent of their incomes. This represents the total effective tax rate on those people with these low incomes from state and local governments in New Hampshire, including portions of taxes passed through rent and motor vehicles fees. Those in the middle 20 percent, making between $45,000 and $72,800, see the greatest estimated share of their incomes being paid in property taxes of any group, at 6.3 percent, with a total effective tax rate of 8.1 percent from all state and local taxes. The report divides the top 20 percent into three sub-groups, and shows the top one percent of income earners, or those with more than $514,900 a year in income, paid about 3.0 percent of their incomes in state and local taxes.

graph share of state and local taxes by income group

To learn more about the analysis, read the full report from the Institute on Taxation and Economic Policy titled Who Pays? A Distributional Analysis of the Tax Systems in All 50 States. To learn more about the ways in which New Hampshire raises revenue, see NHFPI’s Revenue in Review resource.

 

Report Shows Higher Effective Tax Rates for Residents with Low Incomes (PDF)

 

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New Data Show Food Insecurity Levels Declining Prior to the COVID-19 Crisis

10 Sep 2020

tree with coins

According to data released on September 9 by the United States Department of Agriculture, food insecurity levels in New Hampshire continued to decline during 2019, prior to the onset of the ongoing COVID-19 crisis. The report outlines the trends of reduced food insecurity in the nation and in New Hampshire, declining from the higher levels resulting from the Great Recession of 2007 to 2009. The overall improvements to the state economy through 2019, along with the effectiveness of key nutritional aid programs, did contribute to lower levels of food insecurity, although the benefits of the economic recovery did not reach all Granite Staters in an equal or timely manner. Although food insecurity levels declined through the years preceding 2020, the current crisis facing Granite Staters is not reflected in these 2019 data. The recent economic pressures on many individuals and families with lower incomes in New Hampshire have been severe, and current levels of food insecurity are very likely to be substantially higher.