The rich folks are coming! The rich folks are coming!

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“Very heavy taxes, are hurtful, because they lessen the increase of population by making the means of subsistence, more difficult.”

— John Adams, 1780

Last November, Massachusetts voters approved a so-called “millionaire’s tax.” It raises the state income tax from 5% to 9% for incomes of $1 million or more, an 80% tax increase. 

Four months later, the Massachusetts Society of Certified Public Accountants is sounding an alarm.

After surveying 270 member CPAs, the society in March released a paper titled “Massachusetts is Losing Residents and it’s Getting Worse: Can Tax Policy Changes Mitigate Outmigration?”

The survey of Massachusetts certified public accountants found that:

  • 82% of CPAs surveyed indicated that their high-income clients have expressed plans to leave Massachusetts in the next 12 months. Florida and New Hampshire are overwhelmingly the most popular choices for relocation. While some may argue that a move to Florida is driven by a desire for better weather and a different lifestyle, the fact that the second most popular destination is New Hampshire suggests that people want to stay in the area but may be motivated instead by a lower cost of living, including a lower tax burden. Furthermore, New Hampshire is set to repeal its Interest and Dividends Tax by 2026, which would make a decision to relocate even more appealing.

  • 61% of respondents indicated that tax policy is the primary reason their clients are considering leaving the Commonwealth in the next 12 months. 

  • An additional 39% of CPAs indicated that tax policy is a consideration for relocation. 

  • 0% of respondents indicated that tax policy is not a factor in the decision for high-income taxpayers to relocate.

  • More pointedly, half of CPAs said that the new Millionaire’s Tax specifically is the primary reason their clients are considering a move in the next 12 months.

“Some may have been willing to bear Massachusetts’ tax policy in the past, but moving from a five to nine percent income tax rate is an unprecedented 80% rate increase,” the report concluded. “That will undoubtedly inspire affected Massachusetts residents to reconsider their primary residence.”

New Hampshire Business Review reached a similar conclusion after interviewing New Hampshire real estate agents.

Outliers

The Massachusetts CPAs call Massachusetts an “outlier” in the region for its extremely high tax rates and complex tax code. 

“Being an outlier makes it more difficult for the Commonwealth to compete with its regional neighbors and on the national landscape when it comes to attracting jobs, residents and capital investment, but it also violates basic tax principles of neutrality and economic efficiency,” the CPAs wrote.

“The current tax code introduces complexity and incentivizes opportunities to use a domicile change as a tax planning tool, which creates a host of unintended consequences for the state. Before the Millionaire’s Tax Massachusetts maintained a competitive edge in our region with the relatively low, flat individual income tax rate, which helped mitigate other issues such as the uniquely burdensome short-term capital gains tax rate and estate tax. Unfortunately, that is no longer the case.”

Those are words New Hampshire policy makers should always remember. 

New Hampshire is an outlier too, in the other direction. Our lower tax burden has helped to make our state the economic envy of the region, a continental marvel and a haven for tax refugees.

New Hampshire ranks 47th in state tax collections per capita, just a hair worse than Florida, according to a Tax Foundation ranking released this month. 

How do the other New England states fare? They’re all in the top 20. 

Vermont is No. 1, Connecticut 3, Massachusetts 7, Maine 15, and Rhode Island 16. 

New Hampshire collects very little tax revenue per person, compared to our neighbors, and yet we have the region’s lowest poverty rate and a booming economy. And we’re stealing population from the high-tax jurisdictions around us. Funny how that works. 

WalletHub, in an analysis also released this month, ranked New Hampshire 48th (third best) in tax burden. Maine and Vermont ranked in the top five, and the rest of the New England states were in the top 20. 

Migration patterns don’t precisely align with tax burden rankings because people aren’t 100% economically motivated, but there’s a tremendous amount of overlap. In 2022, Americans did tend to move from high-tax to low-tax states, as usual, according to several different data sets, including the Census’ own. 

The top in-migration states in 2022 were low-tax Florida, Texas, North Carolina, South Carolina and Tennessee, while the top out-migration states were high-tax California, New York, Illinois, New Jersey and Massachusetts, according to the list compiled by the National Association of Realtors.

Just-released Census data show that six of the top ten counties in the United States for population growth from July 2021-July 2022 were in Texas. The counties that lost the most people were Los Angeles County and Cook County, Illinois, Axios reported. 

The Massachusetts CPAs note in their report that a huge tax rate increase on people who are most able to move, passed right as the rise of remote work has made people less tied to their location, is a recipe for exodus. 

Likewise, a big tax rate cut on the same people, at the same time, would be a strong attraction. Strategically, this year would be the perfect time to accelerate the phase out of New Hampshire’s Interest & Dividends tax. 

Scheduled to phase out over the next four years, the tax remains for now a signal to high-wealth individuals that Florida would be a better relocation destination. 

Like any number of high Massachusetts taxes, the I&D tax is a disadvantage. It weakens New Hampshire’s competitive position and serves as a disincentive to move, or stay, here. 

It’s currently on schedule to be phased out by 2027. The House Finance Committee has recommended moving that date to 2025. Were the state to do that, or nix the tax entirely this year, it would not be lost on high-income individuals, retirees and anyone else with income from interests or dividends that New Hampshire’s tax burden is falling as Massachusetts’ is rising. 

New Hampshire is not listed among the seven states that truly have no income tax. Eliminating the I&D tax would put us on that list and make New Hampshire an even more attractive destination. 

Some might say that we don’t have to make ourselves more competitive if Massachusetts is making itself less competitive. But state tax competition is no longer just regional. 

The rise of remote work makes it even easier for people to shop for a low-tax place to live, regardless of where their employer is located. And the world’s increasing wealth makes it easier than ever for investors, entrepreneurs, retirees and others to move to favorable jurisdictions. 

The Massachusetts CPAs point out that when high-income residents leave Massachusetts, they take their community involvement and charitable giving with them. Making New Hampshire more attractive to these increasingly mobile people benefits not just New Hampshire’s economy, but our communities too. 

While Massachusetts is pushing higher-income residents out, New Hampshire has an opportunity to turn their attention away from Florida and toward the Granite State. 

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How to crush youth employment? Make it more costly to hire young people

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A surefire way to suppress already low levels of youth employment is to raise the cost of employing younger workers. Some proposals in the Legislature would do that, in the name of helping these same workers. 

One proposal, House Bill 125, would make it illegal to employ 16-and 17-year-olds after 9 p.m. Sunday-Thursday and after midnight Friday and Saturday during the school year. 

Were this to become law, employers would be subject to fines of up to $2,500 each time a high school student clocks out a minute late. (These fines are seldom imposed, according to the state.)

State law currently caps at 35 the number of hours older teens can work during a five-day school week. HB 125 was intended to fix an oversight in a previous revision of youth employment law that inadvertently let teens ages 16 and 17 work up to 48 hours during shortened school weeks. But this particular attempt at a fix would inevitably trigger unintentional violations of state child labor laws. 

The predictable effect of such a law would be to discourage the hiring of high school students, and to reduce the hours of those who are hired. 

New Hampshire already limits youth under the age of 16 to working between 7 a.m. and 9 p.m. Adding a 9 p.m. curfew for older teens would further depress employment in this age group. Teen employment was declining sharply before the pandemic and fell again in 2020. It has not recovered to pre-pandemic levels. 

With a precise time limit on the books, employers would be in violation of state labor law every time a teen doesn’t punch out on time. To avoid being written up for labor law violations whenever a teen gets distracted at the end of his or her shift, employers would end shifts earlier, hire fewer teens, or both. 

As if intended to depress youth employment even further, House Bill 58 would raise the wage for tipped jobs to a minimum of $7.25 an hour. Currently, New Hampshire employers may pay wages as low as $3.26 an hour to employees who earn tips.

HB 58 would set the regular federal minimum as the floor for all jobs, even those with substantial tip income. Were this to become law, restaurants would have to pay all servers an additional $3.99 per hour. The negative effect on employment would be immediate and predictable. 

A University of California-Irvine study published last August found that raising the tipped minimum wage reduced employment. 

“(O)ur evidence is quite clear and unambiguous in pointing to higher tipped minimum wages (smaller tip credits) reducing jobs among tipped restaurant workers, without enough of an increase in earnings of those who remain employed to offset the job loss,” the authors found.

Other research has found that higher minimum wages reduced teen employment, and that “teens exposed to higher minimum wages since 2000 had acquired fewer skills in adulthood.” 

Well-intentioned regulations such as those in HB 58 and HB 125 would end up worsening New Hampshire’s existing labor shortage and hurting the very people they are intended to help. 

In 2019, the U.S. Bureau of Labor Statistics recorded 67,000 employed Granite Staters between the ages of 20-24. In 2022, that number was down to 52,000. 

In 2019, the state estimated the number of waiters and waitresses in New Hampshire at 12,390. In last year’s report, it was down to 7,260, a decline of 41%, even though the entry-level wage was $1 per hour higher. 

Restaurants, already pressed by rising supply, labor and energy costs, have been raising prices to maintain their meager margins. Add in a state mandate to more than double base pay for wait staff, and some restaurants certainly will be forced out of business. Others will raise prices even further. Restaurant prices rose 8.2% from January of 2022 to January of 2023, according to the National Restaurant Association. That’s higher than overall consumer prices, which rose 6.4%.  

According to surveys of New Hampshire Lodging and Restaurant Association members, servers in New Hampshire earn between $20-$45 an hour when tips are included. Granite Staters do tip generously, ranking fifth nationally and first in New England, according to Toast, a Boston company that provides software for point-of-service tablets used by the restaurant industry.

As New Hampshire employers struggle with a labor shortage, persistent inflation and predictions of a looming recession, artificially increasing the cost of employing younger and lower-skilled workers would add an additional burden. As that burden would be tied to the hiring of those workers, it would likely lead to reduced opportunities for them. 

Hurting both employers and younger workers is not the intent of such regulations, but it would be the predicted outcome.  

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As legislators debate minimum wage hikes, the market is pushing wages higher on its own

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In the midst of an acute labor shortage that has pushed wages to new highs, a few legislators have opted to introduce another bill to raise New Hampshire’s minimum wage. 

House Bill 57 would raise the minimum wage to $15 an hour by 2025, then tie it to the inflation rate, ensuring regular, automatic increases. 

New Hampshire has about 48,000 job openings, according to U.S. Bureau of Labor Statistics data, and only about 20,000 unemployed persons. 

This imbalance between job openings and available labor has persisted for years. And that has driven wages in New Hampshire higher. New Hampshire Employment Security put the mean average wage at $30.12 an hour in last year’s report (based on 2021 data). In 2019, it was $25.94. 

The average entry-level wage in the 2022 report was $14.36, up from $11.80 in 2019. 

Competitive pressure is pushing wages up to the point that dishwashers have moved out of the list of the 10 lowest-paid occupations in the state. The lowest average wage in the 2022 report belonged to gambling dealers, at $11.59 an hour. Food preparation workers were above that at $12,10 an hour. 

With a booming economy and a severe labor shortage combining to raise wages naturally, the market is already moving compensation in low-paying occupations toward the $15 an hour goal. House Bill 57 would mandate a $13.50 minimum wage by this September. Fast food restaurants regularly advertise jobs well above that rate now, and food prep workers on average are quickly approaching that level. 

Into this discussion, researchers last month dropped yet another study showing that minimum wage increases have costs that can make people who work in the lowest-paid occupations worse off. 

Researchers at the John Hopkins Bloomberg School of Public Health and the University of Minnesota-Twin Cities School of Public Health found that minimum wage increases reduced the number of employers who offered health insurance. 

“We find that a $1 increase in minimum wages is associated with a 0.90 percentage point (p.p.) decrease in the percentage of employers offering health insurance, largely driven by small employers and employers with more low-wage employees. A $1 increase is also associated with a 1.80 p.p. increase in the prevalence of plans with a deductible and three percent increase in average deductibles.”

Though minimum wage hikes led to reductions in employer-sponsored health insurance, they did not lead to increases in uninsured rates, the authors found. That is “likely explained by an increase in Medicaid enrollment,” they wrote.

This study comes on top of decades’ worth of research that, on the whole, tends to find a negative effect on employment — particularly for younger workers and those with less education — from minimum wage increases. 

The preponderance of research on minimum wage increases shows that government-mandated compensation increases are not cost-free. Forcing employers to raise wages in ways that are unrelated to productivity tends to result in shifting resources from other parts of the business. That can include eliminating hours, positions or benefits.

Advocates for high minimum wages seem to assume that employers, including small businesses, simply have troves of cash reserves lying around and pay what they do out of stinginess. But employers generally aren’t sitting on piles of treasure like Smaug in his cave under Lonely Mountain.

And employers can’t simply manufacture more money whenever they want to spend more. Only the government can do that. Employers have to make trade-offs. If the government makes them pay more for low-skilled labor, they’ll take that money from somewhere else. And the results won’t necessarily be net positive for the low-skilled workers legislators intended to help. Usually, the opposite is true. 

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Humbug! Scrooge would want fewer apartments

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In the opening of “The Muppets Christmas Carol,” Gonzo and Rizzo the Rat are selling apples in a dingy London market. Gonzo scolds Rizzo for eating the inventory. 

“Hey, I’m creatin’ scarcity,” Rizzo replies. “Drives the prices up.”

Rizzo is a clever rat.

Later in the movie, the ghosts of the Marleys tell Scrooge how they enjoyed overcharging the poor for rent. (In the Muppets version, there are two Marleys.)

Rizzo didn’t comment on those lines, but he might’ve dead-panned, “maybe someone ate the apartments and drove up prices?”

As Dickens’ classic tale is retold and rewatched this Christmas season, many Granite Staters face a harsh reality that Rizzo — and Scrooge — would understand. Scarcity keeps driving up prices for homes and apartments. 

You don’t need to be visited by the ghosts of housing markets past to see the problem — and why Scrooge would love it. You just have to compare the markets for short-term and long-term rentals.

Demand for short-term rentals has surged nationwide. The number of nights booked in short-term rentals rose 15.8% from October of 2021 to October of 2022, The Wall Street Journal reported last week. 

Investors in short-term rental properties expected prices to rise along with demand. But something happened on the way to sipping daiquiris on the beach as the rent money poured in. A lot of other people responded to the high rates by offering their properties for rent too.

“However, while the absolute number of bookings has risen, there has also been a sharp rise in supply of available short-term rental listings in the U.S., up 23.3% in October 2022 compared with October 2021,” the Journal reported. 

A woman who rents her California home on Airbnb told the Journal, “I’ve felt a massive drop” in rents she can charge. A holiday weekend at her home fell from more than $1,000 per night during the pandemic to around $275 now. Why such a collapse? Demand rose, which drove up prices, and those higher prices prompted investors to increase supply, which brought prices back down. That’s how a market would normally function. 

But it’s not how the market for long-term rentals works. 

In October, median rents were up nationwide by 7.8 percentage points, year over year, according to rent.com. In New Hampshire, the median rent was up 14.12%, by the website’s measure. 

Would-be home-buyers have experienced similar price increases. The median single-family existing-home price was up 8.6% in the third quarter, according to realtor.com. The Union Leader reported Tuesday that the median single-family home price in New Hampshire rose by $34,000 from last November to this November. It’s now $435,000.

For homes, apartments and short-term rentals, demand remains strong. But prices have fallen in only one of those markets: the one where supply faces the fewest constraints.  

“My reaction is that the growth in short-term rentals has come about because people are converting their own homes, or parts of them, into short-term rentals,” said Jason Sorens, director of the Center for Ethics in Society at St. Anselm College and author of the Josiah Bartlett Center’s 2021 housing report. “Rarely do people build units specifically for short-term rental. And that’s where the real housing supply bottleneck is: it’s become harder to build. Without more building, we aren’t going to see a similar supply increase for long-term rentals. But the other point this news shows us is that if we did increase supply, it would reduce rents.”

As we documented last year, overly restrictive local regulations are a significant barrier to new development in New Hampshire. These regulations make it difficult to build new housing, which prevents developers from meeting demand. That creates scarcity, which drives up prices. Rizzo would be proud. 

And Scrooge would be thrilled. Scrooge, don’t forget, was a landlord as well as a money lender. He could get away with charging outrageous rents for decades only if his renters had no cheaper options. So Scrooge would be no fan of loosening land use regulations to allow more apartment and home construction.

If Granite Staters want to avoid turning our existing housing shortage into a Dickensian nightmare, the only solution is to loosen the restrictions and let developers create more supply.   

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Be thankful for our amazing abundance

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As Americans and Granite Staters, we have so much to be thankful for that keeping track of it all can be difficult. Where does one begin? 

Family and friends, health and happiness, clean air and water, mountains and maple syrup, having a buffer of at least three states between us and New Jersey. 

Gratitude often comes from perspective. Surviving documents from the settlers who enjoyed the first Thanksgiving in Massachusetts Bay offer a great dose of it. 

Edward Winslow wrote that the men went hunting and fowling, bringing back “as much fowle, as with a little helpe beside, served the company almost a weeke,” and that natives presented five deer to the company for the feast. 

“And although it be not always so plentifull, as it was at this time with us, yet by the goodness of God, we are so farre from want, that we often wish you partakers of our plentie,” he wrote.

The food was so plentiful that year that it inspired settlers to send home letters so unbelievable that Gov. William Bradford felt the need to remark that they “were not fained, but true reports.” The food was all gathered, hunted or fished. There was no Market Basket; the Demoulas family hadn’t arrived yet. 

Here’s your perspective: Imagine living in a world in which enduring the hardships of a colonial settler’s life improved your living standards.

For the Pilgrims, living in the undeveloped Massachusetts frontier was an economic step up. Their idea of abundance was a good harvest (provided by providence) and enough wild game to live on for a week. Even with help from the native inhabitants, the first settlers struggled to produce a subsistence-level supply of food.

Before the Enlightenment unleashed the flood of human ingenuity that created modernity, life was like that for pretty much everyone.

As Enlightenment ideas eroded rigid social hierarchies and unleashed the brainpower of the lower classes (and created a large middle class), an explosion of innovation led to historically unprecedented gains in food productivity.

In 1600, 20 years before the Mayflower landed, the United Kingdom produced enough food to supply its population with 1,877 calories per person per day, according to the data website Our World In Data. That figure was 1,381 in the year 1,300. So over nearly 300 years, the UK gained about 500 calories per person per day.

By 1700, the UK produced 2,229 calories per person per day, for an increase of 352 calories in just 100 years, a huge improvement. 

But in the next 318 years, the UK’s food productivity exploded. By 2018, the country produced a 3,344 calories per person per day, a stunning 50% increase in just over 300 years. 

The United States produced 2,952 calories per person per day in 1800, the year Thomas Jefferson beat John Adams for the presidency. That was about 500 more than the UK, 700 more than Germany and 1,100 more than France. And the industrial revolution hadn’t taken off yet. 

By 2018, the United States was producing a world-leading 3,782 calories per person per day. 

“Almost all that ordinary people used and consumed in the 17th century would have been very familiar to people living a thousand or even a couple of thousand years earlier,” Max Roser explains. “Average incomes (as measured by GDP per capita) in England between the year 1270 and 1650 were £1,051 when measured in today’s prices.”

Then came the Enlightenment, and the great enrichment that followed. 

As Roser puts it, “an average person in the UK today has a higher income in two weeks than an average person in the past had in an entire year. Since the total sum of incomes is the total sum of production this also means that the production of the average person in two weeks today is equivalent to the production of the average person in an entire year in the past. There is just one truly important event in the economic history of the world, the onset of economic growth. This is the one transformation that changed everything.”

This is why the Josiah Bartlett Center for Public Policy puts such a high priority on economic growth. Without it, the world as we know it would not exist. Neglect or smother it, and our descendants will live worse, not better, lives than we do. 

Freedom creates opportunity, which creates abundance, which leads to statistics like this: In the United States today, there are two job openings for every unemployed person. In New Hampshire, there are three job openings for every unemployed person. 

Four hundred years ago, we were in a desperate, daily search for enough calories to survive the next few days. Now, we’re in a desperate, daily search for ways to convince people to stop eating so much.

In the United States, and much of the rest of the world today, prosperity and abundance are so common that they’ve become the default expectation for the vast majority of the population. For that, we will be forever grateful. 

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Florida passes New Hampshire as most economically free state

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New Hampshire has lost its title as the most economically free state in the union. The top spot this year goes to Florida, by a hair, according to the 2022 Economic Freedom of North America report released today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

Florida scored 7.94 out of 10 in this year’s report (up from 7.78 last year), beating out second-place New Hampshire (7.84).

Economic freedom—the ability of individuals to make their own economic decisions about what to buy, where to work and whether to start a business—is fundamental to prosperity.

“As we’ve pointed out for years, Florida, Tennessee, Texas and other states are serious about gaining a competitive advantage over New Hampshire,” said Andrew Cline, president of the Josiah Bartlett Center for Public Policy. “If we want to have a New Hampshire Advantage 20 years from now, we have to stay focused on expanding economic freedom for all Granite Staters. If we rest on our past accomplishments, we will be left behind.”

Enhancing government control over individuals’ economic choices takes us in the opposite direction. But just as importantly, failing to move quickly enough to enhance economic opportunity for Granite Staters can harm New Hampshire too, as more aggressive states pass us by.

“When governments allow markets to decide what’s produced, how it’s produced and how much is produced, citizens enjoy greater levels of economic freedom,” said Fred McMahon, the Dr. Michael A. Walker Research Chair in Economic Freedom at the Fraser Institute and co-author of this year’s Economic Freedom of North America report, which measures government spending, taxation and labor market restrictions using data from 2020, the latest year of available comparable data.

Rounding out the top five freest states are South Dakota (3rd), Texas and Tennessee (tied for 4th). At the other end of the index, New York is once again the least-free state (4.25) followed by California (49th), Hawaii (48th) and Vermont (47th). For the first time, the U.S. territory of Puerto Rico was included in the index—its score in this first preliminary effort was 2.04. The least-free state’s score was more than twice as high.

Across North America, the least-free quartile of jurisdictions (including Canada and Mexico) had an average per-capita income of just $2,160 compared to $54,927 for the most-free quartile.

“Hundreds of independent studies have produced overwhelming evidence that higher levels of economic freedom are associated with more opportunity, more prosperity, greater economic growth and more jobs,” said Dean Stansel, report co-author and economist at Southern Methodist University.

The Economic Freedom of North America report (also co-authored by José Torra, the head of research at the Mexico City-based Caminos de la Libertad, and Ángel Carrión-Tavárez, director of research and policy at the Instituto de Libertad Económica (ILE) in Puerto Rico) is an offshoot of the Fraser Institute’s Economic Freedom of the World index, the result of more than a quarter century of work by more than 60 scholars including three Nobel laureates.

The report can be read here: EFNA-2022-US-POST

Detailed tables for each country and subnational jurisdiction can be found at www.fraserinstitute.org.

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Granite Staters say they want more housing in their communities

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Granite Staters support building affordable housing in their communities, and even in their neighborhoods, a new poll from the Center for Ethics in Society at St. Anselm College has found.

The results upend the traditional view that residents don’t want new housing built close to them. That view has been used for decades to justify local regulations that limit the construction of homes and apartments. The new poll suggests that Granite Staters are much more open to change than previously assumed. 

Granite Staters expressed in the poll strong support for building affordable housing in people’s own communities, changing local regulations to allow more housing, and limiting local planning and zoning regulations.   

Among the findings:

BUILDING AFFORDABLE HOUSING 

  • By a 69%-29% margin, New Hampshire voters said “my community needs more affordable housing to be built.” This represents a 9% increase from last year’s survey. 
  • For the first time, the center asked a subset of voters about building affordable housing in their “neighborhood” instead of their “community.” While “community” might refer to a whole town or city, “neighborhood” sounds like a much smaller context to most people. Respondents still endorse building more affordable housing in their own neighborhood by a 7-point margin (50-43%). 

CHANGING LAWS AND REGULATIONS 

  • By a 52-40% margin, New Hampshire voters support changing town and city zoning regulations to allow more housing to be built.
  • By a 70-21% margin, respondents endorse setting a “hard limit” on how long local planning and zoning boards can take to review permits to build housing.
  • By a 38-35% margin, Granite State voters endorse the concept of a bill that failed this session, which would have allowed property owners to build up to four housing units on any residentially zoned lot served by municipal water and sewer.

REEXAMINING WHERE HOUSING IS BUILT

  • By a 61-37% margin, N.H. voters oppose the idea that multifamily housing should only be built in cities, not in suburbs and rural areas.
  • By a 53-42% margin, voters oppose the state “doing more to prevent housing development and keep the state the way it is.” The poll’s data shows young people under 35 and retirees are generally the most supportive of building more homes and changing state and local laws to allow that to happen. As expected, non-homeowners are more likely than homeowners to endorse building affordable and multifamily housing. It also shows that while conservatives are less likely to endorse the concept of affordable housing, they are more likely than liberals to endorse having the state set a hard limit on municipal permit review timelines. 

“Legislators have yet to address the acute housing shortage caused by local overregulation in this session, but these poll results show that Granite State voters don’t want to wait,” Jason Sorens, director of the Center for Ethics in Society, told the Josiah Bartlett Center. “They want their own towns to change the rules to allow more homes to be built, and they want state government to get involved by setting a hard limit on permit review times and maybe even directly preempting local zoning rules. Going full ostrich on the housing issue could hurt the legislative majority if the problem continues to go unaddressed.”

Though Gov. Chris Sununu championed housing reform at the start of the year, the Legislature killed most reform efforts. The biggest housing bill of the year (Senate Bill 400) passed the Senate, but stalled in the House over concerns about the political costs of limiting local governments’ ability to restrict new development.

The bill would have slightly curtailed the power of local boards to limit where residential housing is built, and it would have allocated more state funding to municipalities that allowed more housing. 

The House removed those provisions and amended others, severely weakening the bill. 

Last week, both chambers incorporated a watered down version of SB 400 into another bill, HB 1661. It requires local boards to include written, specific findings of fact when rejecting a housing application. It requires zoning boards to begin formal consideration of received applications within 90 days of receiving them, and planning boards within 65 days.

A requirement for municipalities to grant workforce housing the same regulatory allowances made for senior housing was changed from a “shall” to a “may.” And a provision forbidding local boards from putting age restrictions on workforce housing was removed. 

Legislators also killed a bill to allow duplexes, triplexes and quadplexes on any single-family lot, one to forbid minimum lot sizes of more than half an acre unless it’s to accommodate a septic system, another to forbid minimum lot sizes of more than 10,000 square feet (excluding those with septic systems), and one forbidding proscriptions on workforce housing. 

Legislators did pass a bill to create a commission to study barriers to housing construction.  

A report published by the Josiah Bartlett Center last October, and written by the Center for Ethics in Society’s Sorens, detailed how local land use regulations have reduced the state’s housing supply and driven up prices.

The study found that residential land use regulations are associated with growing socioeconomic segregation and slowing population growth.

As housing becomes more expensive, fewer people are moving to New Hampshire, especially to those towns that are most expensive. Those who stay are disproportionately wealthy and college-educated, while middle- and lower-income families leave because they cannot find affordable housing. Costly housing in towns with better schools also limits families’ access to educational opportunity. Finally, the sprawl caused by anti-density policies such as minimum lot sizes increases drive times and road maintenance costs and worsens air and water quality.

 

 

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Legislators push student loan forgiveness for one industry

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As Republicans in Washington fight Democratic efforts to forgive federal student loans, GOP legislators in New Hampshire are promoting $1 million in tax-funded student loan forgiveness for graduates in one high-tech industry — human organ manufacturing.

In 2018, legislators passed a package of subsidies and tax breaks sought by the Advanced Regenerative Manufacturing Institute, a Manchester organization founded to develop synthetic human organs in partnership with other companies, including new local startups. 

That package, Senate Bill 564, granted companies engaged in advanced regenerative manufacturing a 10-year exemption from state business taxes. At the time, ARMI was the only organization that qualified for the tax exemption. The Department of Revenue Administration’s most recent annual tax expenditure report states that multiple companies have filed paperwork to be deemed eligible for the credit, but there are so few that disclosing details of the filings would violate their privacy under state tax information disclosure laws. 

Included in the law was a Regenerative Manufacturing Workforce Development Program, through which the state would finance the repayment or forgiveness of student loans for qualified graduates. To be eligible, the graduates would have to work for a qualifying manufacturer in New Hampshire for at least five years. 

In the four years since its authorization, the Regenerative Manufacturing Workforce Development Program has never been funded. Lawmakers tasked the New Hampshire Business Finance Authority (NHBFA) with designing and administering the program, but made no appropriation. 

Legislators learned of the program’s unfunded status earlier in the legislative session, and Republican leaders took steps to find money for it. A $1 million appropriation was attached to House Bill 1256, a bill dealing with the Department of Military Affairs and Veterans Services. 

In the HB 1256 conference committee last Wednesday, the funding drew bipartisan support, with legislators noting that the $1 million was a fraction of what had been intended for the program. 

“This is a test run to see how much they actually need for this,’ Rep. Al Baldasaro, R-Londonderry, said.

Need is an interesting choice of words. ARMI initially received an $80 million Department of Defense grant for its regenerative manufacturing work and $214 million in other investment, according to a DOD press release from 2016. It has attracted other companies to Manchester’s Millyard, where work on human tissue generation is expanding — without the student loan subsidy.

It is not known how much of an employee’s student loans the program would repay or forgive, as the program has been on hold pending funding. A draft proposal the NHBFA gave to legislators in 2019, assuming full funding, stated that employees would have their student loans entirely paid off over five years. 

In general, loan repayments are considered taxable income unless otherwise exempted from taxation by law (as is the case with many federal student loan repayment and forgiveness programs). The NHBFA’s draft proposal stated that under federal income tax laws as of 2019, the forgiveness “would result in taxable income” to the employee.

The local forgiveness for regenerative manufacturing employees is supposed to help keep the industry in New Hampshire and facilitate hiring. But such favoritism hurts other employers who compete for the same workforce, and it transfers wealth from some businesses to others, based purely on which ones are politically favored.

And such subsidies clearly aren’t needed in an industry that has proven capable of raising hundreds of millions of dollars in startup capital.

In Washington, Republicans are moving in the opposite direction. U.S. Senate Republicans in April introduced the “Stop Reckless Student Loans Action Act” to end the Biden administration’s pause on student loan repayments and block future loan forgiveness. 

One stated reason for opposing federal student loan forgiveness is that most Americans don’t have college degrees, and they would wind up subsidizing the degrees of the roughly one third of Americans who graduated from college.

In New Hampshire, 35.4% of men and 38.4% of women have a bachelor’s degree, according to a state report issued in 2019. 

For years, Republicans in Concord have been divided on the issue of student loan forgiveness.

Earlier in the session, legislators blocked a Sununu administration effort to create a larger-scale loan forgiveness program. The Joint Fiscal Committee tabled a proposal to use $17 million in federal American Rescue Plan funds to forgive the loans of students who agreed to work for at least four years in New Hampshire after graduating college. 

Gov. Sununu in 2019 proposed a $32 million student loan assistance program to be financed with revenue from the state’s 529 college savings program. Legislators rejected the idea in favor a smaller Graduate Retention Incentive Program. 

That program offers free job postings and marketing for companies that agree to give a $1,000 bonus or student debt payment to employees who agree to workin the state for four years.

New Hampshire has an established loan repayment program for medical professionals who agree to work in underserved areas of the state. It cost $766,783 in the current budget.

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Impeding the expansion of new telecom technologies would hurt New Hampshire

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A House bill considered in committee this week would deny much of New Hampshire access to the most advanced telecommunications technologies.

House Bill 1644 would require “telecommunications antennas” to be placed “at least 1,640 feet from residentially zoned areas, parks, playgrounds, hospitals, nursing homes, day care centers, and schools.”

The bill’s stated purpose is to protect people from the “significant public health risk associated with the cumulative effects of radio frequency radiation which is growing every day with the proliferation of cell tower transmitters.”

Some people who believe that cell phone radiation causes cancer think that 1,640 feet, or 500 meters, is the minimum safe distance from a cellular network antenna. 

But this fear is unfounded, according to hundreds of studies and numerous public health agencies and organizations: 

  • The Food and Drug Administration concluded in February of 2020 that “there is no consistent or credible scientific evidence of health problems caused by the exposure to radio frequency energy emitted by cell phones.” The FDA report noted that brain cancer cases have declined as mobile phone use has grown.
  • An Australian study published in March of 2021 reviewed 138 studies of radio frequency fields consistent with 5G networks. It found “no confirmed evidence that low-level RF fields above 6 GHz such as those used by the 5 G network are hazardous to human health.”  
  • The World Health Organization concluded in 2014 that “no adverse health effects have been established as being caused by mobile phone use.”
  • The Centers for Disease Control and Prevention has concluded that “we do not have the science to link health problems to cell phone use” at this time.
  • “At this time, there’s no strong evidence that exposure to RF waves from cell phone towers causes any noticeable health effects,” the American Cancer Society has concluded. 
  • The National Cancer Institute notes that cell phone radiofrequency “energy is too low to damage DNA” and that the “only consistently recognized biological effect of radiofrequency radiation absorption in humans that the general public might encounter is heating to the area of the body where a cell phone is held (e.g., the ear and head). However, that heating is not sufficient to measurably increase body temperature. There are no other clearly established dangerous health effects on the human body from radiofrequency radiation.”

Were legislators to pass the bill out of a misplaced sense of caution, the economic and quality of life effects would be substantial — and negative. The Town of Amherst shows how. 

Amherst’s zoning map shows that residential/rural zoning covers 62.7% of the town, and “Northern Rural” zoning, where single-family homes are allowed, covers another 24.43%. That leaves little room for new telecommunications antennas. The bill would shrink the remaining zones by 1,640 feet from any side that touches a residential zone, and it would create no-antenna zones around every park, playground, hospital, nursing home, day care center, and school.

Further, if “residentially zoned areas” means any zone that allows any residential use, then the areas where antennas would be allowed would shrink to a tiny fraction of available land in any given community.

Consider Charlestown, a community in dire need of economic development. A look at its zoning map shows that the vast majority of the town is zoned either “mixed use” or “residential/rural.” Residential dwellings are permitted in the mixed use zone. 

Residences are allowed in the “Town Center,” “North Main Street,” and “Business” zones as well. Residences are prohibited only in a tiny section of town zoned for industrial use, and at the Fort at No. 4 historic site. 

Were HB 1644 to become law, Charlestown likely would be carved out of the state-of-the-art 5G cellular network that soon will connect much of the planet to ultra high-speed wireless broadband service. 

This scenario would be repeated in town after town throughout New Hampshire. The bill would risk wiping chunks of New Hampshire off the 5G map, creating large gaps in coverage and exacerbating the digital divide that already holds rural areas back economically.   

If that weren’t bad enough, the bill violates the federal Telecommunications Act of 1996.

New Hampshire’s Commission to Study The Environmental and Health Effects of Evolving 5G Technology concluded in its final report that “this Act says, among many other things, that the siting of any antennae cannot be denied due to health concerns.”

HB 1644 explicitly attempts to deny siting of antennae due to health concerns. It plainly violates federal law. 

Remote parts of New Hampshire are already economically disadvantaged relative to places located closer to commercial and technological hubs. Impeding the expansion of advanced communications technologies to these areas would hurt them, not help them. 

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New Hampshire ranks first in freedom in new Cato report

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A week after New Hampshire placed first in the Fraser Institute’s Economic Freedom in North America report, the state scored a first place finish in another prestigious freedom ranking, the Cato Institute’s 2021 Freedom in the 50 States report. 

In Cato’s report (written by Will Ruger and Jason Sorens), New Hampshire ranked third in economic freedom, second in personal freedom, and first in overall freedom. 

In economic freedom, New Hampshire ranked in the top five in state tax burden, government consumption and lawsuit freedom, but was far behind in numerous other metrics, including local tax burden (43), land use freedom (40), labor market freedom (27), health insurance freedom (19), cable and telecommunications freedom (20), and state and local assets (43).

In overall regulatory freedom, New Hampshire placed near the middle of the states at 23rd, showing that the “Live free or die” state has areas where government imposes significant economic constraints on citizens. 

In personal freedom, New Hampshire performed better than in economic freedom, ranking second in gun rights, fifth in education freedom, and fourth in asset forfeiture. The state finished in the top ten in travel freedom, mala prohibita (acts that are crimes in statute but not common law, such as firework and raw milk bans), and incarcerations and arrests for victimless crimes. 

Low rankings in personal freedom included gambling freedom (41), tobacco freedom (21), alcohol freedom (38), and campaign finance (45). 

As in the Fraser Institute’s Economic Freedom in North America, New Hampshire holds its top ranking by a narrow margin. 

The top five states for overall freedom:

  1. New Hampshire
  2. Florida
  3. Nevada
  4. Tennessee
  5. South Dakota

The difference between New Hampshire’s and Florida’s scores was just four hundredths of a percentage point (0.592 vs 0.552). 

In the Fraser Institute report, New Hampshire held its top place by one one-hundredth of a point (7.83 vs. 7.82). 

The top fives states for economic freedom in Fraser’s rankings:

  1. New Hampshire
  2. Tennessee
  3. Florida
  4. Texas
  5. Virginia

The Cato report shows how rapidly other states have been gaining on New Hampshire. Since Cato’s last ranking for 2018-19, New Hampshire ranked No. 8 for growth in overall freedom, but many of the states with which it now competes for population growth and business location posted similar or larger gains. 

Tennessee and North Carolina ranked 11th and 13th in overall freedom growth since the last report, while Kentucky ranked sixth, Connecticut fifth, Michigan fourth, Florida second and South Dakota first. 

The data are more concerning for New Hampshire when looking back at the last 20 years. Since 2000, the top fives states for freedom growth were:

  1. Florida
  2. Michigan
  3. Wisconsin
  4. Oklahoma
  5. Georgia

New Hampshire ranked 29th, well behind states that have been aggressively cutting taxes and deregulating, such as North Carolina, West Virginia, Tennessee, Texas and Arizona. 

As a state that already ranked high on overall freedom, New Hampshire has set an example with policies that have been copied by other states. But as both reports show, there are areas where New Hampshire can make significant improvements to increase personal and economic freedom. 

Making those improvements would accomplish the primary goal of maximizing individual autonomy for Granite Staters, thus living up to New Hampshire’s promise of being the “Live free or die” state. It also would improve the conditions for economic growth, which would gradually raise New Hampshire’s standard of living. 

While these back-to-back reports give Granite Staters cause to boast about our relatively high level of economic and personal freedom, they also offer a warning that this position is threatened and will not be maintained without a continued effort to remove barriers to freedom that exist at the state and local levels. 

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