Concord, N.H. —  As the New Hampshire House of Representatives prepares to finalize its State Budget proposal next week, a new analysis from the New Hampshire Fiscal Policy Institute (NHFPI) finds that business tax rate reductions have cost the state between $795 million and $1.17 billion in forgone revenue since 2015 — funding that could have supported public services like education, health care, or infrastructure, or provided tax reductions directly aimed at benefitting individuals with low and moderate incomes.

The report, Business Tax Rate Reductions Led to Between $795 Million and $1.17 Billion in Forgone Revenue for Public Services Since 2015, uses newly-available data to update and extend the time period of prior NHFPI estimates published in 2023 and show the fiscal impact of reductions to New Hampshire’s two primary business taxes: the Business Profits Tax (BPT) and the Business Enterprise Tax (BET).

“The research clearly shows that business tax rate reductions did not generate enough economic activity to offset the revenue shortfalls they generated,” said Phil Sletten, Research Director at NHFPI and the study’s lead author. “New Hampshire’s business tax revenue growth lagged behind Maine and Vermont, as well as average growth nationwide, indicating New Hampshire’s tax policy changes did not cause the state’s increase in revenue.”

While total business tax revenues rose over the last decade, the study builds on the 2023 analysis and finds no evidence that those increases were driven by the rate reductions. Instead, national trends, including surging corporate profits following the COVID-19 pandemic, appear to be the key drivers — trends that also benefited other states that did not reduce their business tax rates. New Hampshire’s 124 percent increase in business tax revenues from 2015 to 2023 fell behind the 166 percent increase in Vermont and 167 percent increase in Maine during the same period. The top corporate tax rates in Maine and Vermont did not change during this period.

“Budget decisions involve tradeoffs, and policymakers need good information to understand those tradeoffs. This research provides insights into which policies are most effective at strengthening our economy and improving the lives of Granite Staters,” said Sletten.

You can read the full study at https://nhfpi.org/resource/business-tax-rate-Reductions-Led-to-Between-$795-Million-and-$1.17-Billion-in-Forgone-Revenue-for-Public-Services-Since-2015.

###