SB 193, the voucher bill currently under consideration by the House Finance Committee, is not the only school choice bill in the legislature right now. HB 1492 proposes to enable parents to send their children to any public school at local taxpayer expense.
And HB 1686 would significantly expand sources of funding for New Hampshire’s original voucher program, established by the 2012 Education Tax Credit bill, from businesses paying the business profits tax to any individual paying New Hampshire tax on interest and dividends.
If both SB 193 and HB 1686 passed, both vouchers could be added together, creating much larger annual grants for home or private schooling.
The many high net worth investors all over the country establishing investment trusts in New Hampshire would benefit even more. Here’s today’s Concord Monitor coverage of HB 1686:
A bill to expand New Hampshire’s Education Tax Credit program has some worried the state could create a tax shelter for the wealthy.
Currently, businesses can donate to certain school choice scholarship programs [the 2012 Education Tax Credit program] and receive a tax credit worth 85 percent in return. House Bill 1686 would make that tax credit available to interest-and-dividends taxpayers – those who pay a 5 percent tax on certain types of passive income.
“What the sponsors have done is open up this tax credit to the average person,” said Republican Rep. Norman Major, the chairman of the House Ways and Means Committee, which recently recommended the bill on a party-line vote.
But some Democrats are warning that expanding the tax credit to individuals, instead of just businesses, will mean rich, savvy taxpayers will be able to stack the credit along with a federal deduction for charitable giving – and end up saving more in taxes than what the donation was worth.
“These high-income interest-and-dividends taxpayers can actually make a profit from this if they take advantage of this particular education tax credit and then go ahead at the federal level and use that as a deduction,” said Rep. Joelle Martin, a Milford Democrat on the committee.
Carl Davis, the research director at the Washington-based Institute on Taxation and Economic Policy, has written extensively about ETCs as tax shelters.
….But expanding the tax credit to interest-and-dividends taxpayers, he said, will “make an egregious tax shelter available to many high-income New Hampshire residents.”
“Making so-called ‘donations’ to the program will become a routine part of financial planning for some savvy taxpayers,” he said.
“From a guardianship-of-the-state’s-revenues perspective, this could snowball into a huge reduction in state revenues,” Martin [Rep. Joelle Martin, a Milford Democrat on the House Ways and Means committee] said.
Read the rest of the extremely thorough report here
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