As reported by NHPR, the Senate has voted along party lines in favor of HB 1686, the bill that would expand the education tax credit program passed in 2012 that has remained small because it has failed to gain business support. The expensive proposal is to expand the tax credit to interest and dividend income in a formula that would be very profitable for the many out of state investors who take advantage of New Hampshire’s friendly treatment of trust funds.
The bill now goes to the Senate Finance Committee. The context is interesting.
SB 404, a bill proposing to entirely eliminate the state tax on interest and dividends at a cost of $50 million per year, passed the Senate along party lines in February. Then it went to the Senate Finance Committee which recommended Inexpedient to Legislate by a vote of 3-3. The ITL motion failed in the full Senate on March 15 by a vote of 11-12 but Sen. Feltes’ “Laid on the Table” motion passed 12-11. And that is where it sits now, dead for this session, never having made it to the House.
One possible inference based on the close back and forth on SB 404 is that, while Senate Republicans do want to reduce taxes, $50 million per year was just too much.
On the other hand, the fiscal analysis for HB 1686 says that the cost cannot be determined. The statute in place limits the education tax credit to $5.1 million per year but provides for perpetual automatic expansion if the alloted total is used.
Communicating the new tax credit opportunity to investment advisors would not take long and, according to diligent reporting by NHPR, the tax credit could even be profitable for investors. They could get more back in tax savings than they contribute to the education tax credit program.
So it is logical to expect the program to grow quickly, busting through any limits currently in place.
Let the Senate Finance Committee know what you think. (Gary.Daniels@leg.state.nh.us, firstname.lastname@example.org, email@example.com, firstname.lastname@example.org, email@example.com, Dan.Feltes@leg.state.nh.us). Right away. Time is short.
The education tax credit program has the potential to grow over time to inflict the same kind of damage as SB 193. It has sneaked through under cover of the SB 193 debate but you can still make your voice heard.