New Hampshire ranked the freest state in North America for the 23rd year

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New Hampshire is once again the freest state both in the United States and on the North American continent, topping each index in this year’s Economic Freedom of North America report, released today by the Josiah Bartlett Center for Public Policy in conjunction with Canada’s Fraser Institute.

“Granite Staters continue to choose policies that empower people, not government. When you do that for a very long time, you wind up freer than your neighbors,” said Andrew Cline, president of the Josiah Bartlett Center for Public Policy, which partnered with the Fraser Institute in releasing the report. “In 2025, legislators have a tremendous opportunity to build on this success and liberate Granite Staters from some of the outdated policies that keep us from being even freer.”

Since the Fraser Institute began publishing its Economic Freedom of North America Index two decades ago, the Granite State has ranked No. 1 in 23 of the 26 years studied in the international freedom index. It has ranked No. 1 in 23 of the 42 years covered in the U.S. freedom index.

New Hampshire Gov. Chris Sununu said that notching another first place win shows that New Hampshire’s approach to governing works.

“The model we’ve set here in New Hampshire isn’t just the gold standard for the 50 states, it’s the envy of all North America! The New Hampshire Advantage is more than just a slogan — it’s proof that freedom stems from creating opportunity for the individual without big government,” Sununu said.

This year—the 20th year that the Economic Freedom of North America index has been published—New Hampshire is again the freest state among all U.S. states, having scored 8.12 out of 10 in this year’s report, which measures government spending, taxation, regulations and labor market restrictions using data from 2022, the most recent year of available comparable data.

“In the freest economies, individuals are allowed to make more of their own economic choices—choices concerning work, transactions with others, and owning and using productive property. As government limits these choices, people have less economic freedom and as a result they tend to be worse off,” said Matthew Mitchell, a senior fellow at the Fraser Institute and co-author of the report.

Rounding out the top five freest states are South Dakota (2nd), Florida (3rd), Tennessee (4th), and Texas (5th).

Once again, Puerto Rico came in last among U.S. jurisdictions with a score of 2.13 out of 10. The least free U.S. states were New York (50th), California (49th), Hawaii (48th), New Mexico (47th) and Vermont (46th).

Among the remaining New England states, Massachusetts ranked 28th, Connecticut 29th, Maine 38th, Rhode Island 42nd, and Vermont 46th, making New Hampshire at No. 1 the only New England state to rank in the top half of states for economic freedom.

The report also includes an all-government ranking, which adds federal government policy to the index and includes the 50 U.S. states and the territory of Puerto Rico, 32 Mexican states, and 10 Canadian provinces.

Taking into account both federal and state policies, economic freedom peaked in 2004 then declined and bottomed out in 2009. From 2009 to 2017, economic freedom in North America slowly increased, but has remained more than a quar­ter-point below its 2004 peak ever since. In fact, average economic freedom across all 93 jurisdictions in the index has fallen every year since 2017 and is now only 0.02 points above its all-time low.

And even though the U.S. remains more economically free than Canada, the gap is relatively small.

“The evidence is clear—higher levels of economic freedom are associated with more prosperity, faster economic growth, more investment, and more job opportunities,” said Dean Stansel, economist and research associate professor at Southern Methodist University and co-author of the report. According to the report, total employment grew about three times faster in the most economically free U.S. states than it did in the least free over the last decade.

The Economic Freedom of North America report is 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 in Puerto Rico. It 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.

See the full report at https://efotw.org and fraserinstitute.org/studies/economic-freedom.

New Hampshire’s scores in key components of economic freedom (from 1 to 10 where a higher value indicates a higher level of economic freedom), from 2021 to 2022:

  • Government spending: Unchanged, at 8.84 both years
  • Taxes: changed to 7.47 from 7.18
  • Labor Market Freedom: changed to 8.34 from 7.93

Read the entire report here: us-economic-freedom-of-north-america-2024

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Cigarette smuggling boosted New Hampshire revenues by nearly $1 billion over 15 years

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New Hampshire is the No. 3 state in the country for outbound cigarette smuggling, resulting in a revenue windfall, concludes the latest annual report on interstate cigarette smuggling from the Tax Foundation and Mackinac Center for Public Policy.

From 2007-2022, New Hampshire earned $955 million in state revenue from cigarette buyers who then smuggled their purchases to higher-tax states, according to the report.

(At $1.78 per pack New Hampshire has the lowest tobacco tax rate north of Virginia.)

The study’s data, from 2022, “demonstrate that when states increase their cigarette taxes, smuggling rates increase, both in the form of increased purchases in neighboring states and through illicit international channels,” the report concludes.

“Higher tax rates incentivize smuggling. As tax rates increase, consumers and suppliers search for ways around these costs. In cigarette markets, consumers tend to shop across borders where the tax rates are lower and dealers develop black and gray markets to sell illegally to consumers, paying little or no tax at all. Growing cigarette tax levels and differentials have made cigarette smuggling both a national problem and a lucrative criminal enterprise,” the report states.

“A primary driver of the amount of cigarette smuggling is the relative magnitude of that state’s excise tax compared to the rate imposed by surrounding states or foreign countries. A sizable literature of peer-reviewed academic studies supports these observations.[11] A 2017 study published in Public Finance Review provides the academic theory and estimates for how tax rates affect smuggling, highlighting that easily transportable goods (e.g., cigarettes) will be attractive cross-border shopping items.[12] A 2018 study published in the same journal supported those findings by examining littered packs of cigarettes across 132 communities in 38 states, finding that 21 percent of packs did not have proper local stamps.[13]”

In addition to high taxes, the study found that bans on flavored cigarettes in Massachusetts and California have sent smuggling to new heights.

Massachusetts’ ban on flavored tobacco and vaping products moved it up to the No. 3 destination in the country for smuggled cigarettes and helped make New Hampshire the No. 3 state for outbound smuggling.

 

“The first state to implement a statewide menthol flavor ban was Massachusetts. Its menthol flavor ban took effect in June 2020. In the 12 months following implementation, sales in the Bay State declined by almost 24 percent compared to the 12 months preceding the ban. Through the end of 2021, sales were down more than 25 percent compared to sales from 2019. This decline translates to $135 million less in cigarette tax revenue for Massachusetts (not including lost revenue from sales tax and smokeless tobacco sales).

“Importantly, these sales did not disappear; most of the transactions merely moved to neighboring states or to illicit markets. Throughout most of the US and all the New England states, cigarette sales have constantly declined since the 1960s. It was telling when sales of cigarettes in New Hampshire increased by 22 percent and sales in Rhode Island increased by 18 percent in the 12 months following the Massachusetts menthol ban. Sales in New Hampshire and Rhode Island remain roughly 10 percent higher in 2021 than in 2019 thanks to cross-border Massachusetts shoppers and smugglers.

“Smuggling skyrocketed in Massachusetts. In 2019, prior to the flavor ban, Massachusetts had a net inbound smuggling rate of 19.9 percent, the 12th-highest in the country. The nearly 38 million packs smuggled into the state cost the state more than $133 million per year in forgone revenue.

“A full year after the ban in 2021, smuggling in Massachusetts is up to 37.6 percent, the fourth-highest rate in the country. The 64 million packs smuggled into the state now cost the state $224 million in forgone revenue each year.”

The State of New Hampshire earned $26 million in revenue from cigarette smugglers in 2022, and a total of $955 million from 2007-2022, the report concluded.

Massachusetts’ revenue losses are nearly nine times larger than New Hampshire’s revenue gains.

“In 2019, prior to the flavor ban, Massachusetts had a net inbound smuggling rate of 19.9 percent, the 12th-highest in the country,” the report found. “The nearly 38 million packs smuggled into the state cost the state more than $133 million per year in forgone revenue.

“A full year after the ban in 2021, smuggling in Massachusetts is up to 37.6 percent, the fourth-highest rate in the country. The 64 million packs smuggled into the state now cost the state $224 million in forgone revenue each year.”

The ban has also saddled Massachusetts with enforcement costs.

“Massachusetts has established a dedicated Multi-Agency Illegal Tobacco Task Force, which seized a record-high 18,483 packs of cigarettes in 2022,” the report notes. “This, too, falls dramatically short of the more than 67 million packs smuggled into the state—amounting to 0.027 percent of illegal cigarettes. The scope of the task force also extends to other types of tobacco and vapor devices on a budget of more than $1 million in 2022.”

In addition to creating a market for the smuggling of legal cigarettes domestically, high taxes and flavor bans have created a booming market for illegal, unregulated imports, the report noted, something that has been documented in other studies as well.

In the past, some New Hampshire office-holders have cited cigarette and alcohol smuggling as a reason to raise excise taxes to match those of neighboring states. But this gets the causation backwards.

New Hampshire has always maintained low rates relative to its neighbors. The other Northeastern states created the regional black market by dramatically raising their rates, and in the case of Massachusetts banning menthols.

New Hampshire has been the beneficiary of interstate smuggling, but it was not the cause.

 

 

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Five man-made reasons to be thankful for living in New Hampshire

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Thanksgiving is a time to count your blessings, and Granite Staters have a cornucopia of them. 

Aside from the obvious charms of the state’s natural beauty, its variety of coastline, lakes, hills and mountains, its plentiful ice cream shops and its abundant maple syrup, humans have created additional benefits of living here.

Below are five man-made reasons to be thankful for calling the “live free or die” state home.

  1. Freedom. New Hampshire ranks No. 1 in overall freedom in the Cato Institute’s Freedom of the 50 States report, last year scoring the highest freedom ranking in the history of the report. It ranks No. 1 in economic freedom in all of North America, topping U.S. and Mexican state and every Canadian province. Though New Hampshire has a high regulatory burden compared with other states, its low taxes and generally restrained government leave Granite Staters freer than any other people in North America. 
  1. Low taxes. Though New Hampshire ranks just 16th in total state and local tax burden according to the Tax Foundation, it is has by far the lowest burden in the Northeast. (Alaska, Wyoming and Tennessee tax their residents the least.) No other New England state is in the top half. Rhode Island ranks 36th, Massachusetts 37th, Maine 41st, Vermont 47th and Connecticut 49th. To find a state with a lower total tax burden, you’d have to drive south all the way to Tennessee or west all the way to Michigan. We can do better, but for our region we pay a lot less in taxes than anyone else.
  1. Government ROI. New Hampshire’s tax structure (no sales tax, no income tax as of next year, keeping many decisions at the local level) forces government to be more frugal. New Hampshire consistently ranks No. 1 in Return on Investment (ROI) for taxpayer spending. That is, we get very high quality services at a relatively low cost. We’re sort of the anti-California in that respect. A DOGE-like review of state spending surely could find some additional efficiencies. But relative to residents of other states, Granite Staters get more for their government dollar.
  1. Earnings. For a remote, rural, cold-weather state tucked up in the Eastern tip of the country, New Hampshire posts impressive personal financial numbers. Whether measured by per-capita or median household income, Granite Staters earn significantly more than our neighbors in Maine and Vermont. The median household income here is $13,500 (16%) higher than in Vermont and $23,000 (30%) higher than in Maine. Massachusetts’ median household income is only $7,700 (8%) higher than ours. New Hampshire also boasts the nation’s lowest poverty rate and the lowest percentage of families living in poverty. Granite Staters also have the lowest median debt in the country, according to Census data. We’re frugal and hard working in both our public and personal lives. “Household income and wealth are essential components of individual well-being,” as the Organization for Economic Cooperation and Development puts it. “The ability to command resources allows people to satisfy basic needs and pursue many other goals that they deem important to their lives.” Granite Staters earn a lot relative to most other states, and we’ve made sure that our government takes very little of it.
  1. Overall well-being. A lot of people believe that high taxes and aggressive government interventions are necessary to creating a high quality of life. New Hampshire proves that wrong. Our low-tax, limited-government state measures high not just on rankings of overall quality of life and places to live, but also in areas such as places to raise a family, child well being, health of women and children, safety and places to find a job. Government does provide basic services and infrastructure, but the culture and habits of the people matter more. Without massive interventions and redistributions, Granite Staters have created wonderful communities.

Capt. John Smith, who named New England, imagined the human promise of the region this way in his 1616 book “A Description of New England:”

“So freely hath God & his Maiesty bestowed those blessings on the ~ that will attempt to obtain them, as here every man may be master and owner of his own labour and land; or the greatest part in a small time. If he have nothing but his hands, he may set up this trade; and by industry quickly grow rich; spending but half that time well, which in England we abuse in idleness, worse or as ill.”

Of all the New England states, New Hampshire most embodies that hopeful vision of a free land where individuals can shape their own lives largely unconstrained by the controlling hands of powerful elites.

We’re not all the way there. But we’re closer than anywhere else in North America. And for that we all should be grateful. 

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New England state renewable energy mandates will double energy costs, cause rolling blackouts, while NH policies reduce regional costs

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With New England state governments committed to reducing their carbon emissions at least 80% by 2050, residents and businesses can expect electricity rates to double, along with rolling blackouts, according to a new joint report completed by several of the region’s leading think tanks. The study concludes that weather dependent “renewable” energies — like wind and solar — simply cannot meet regional demands for electricity.

The report, “The Staggering Costs of New England’s Green Energy Policies,” was commissioned by the Americans for Prosperity Foundation, the Josiah Bartlett Center for Public Policy in New Hampshire, the Ethan Allen Institute in Vermont, the Fiscal Alliance Foundation in Massachusetts, the Maine Policy Institute, the Rhode Island Center for Freedom, and Prosperity, and Yankee Institute in Connecticut. The report was conducted by Always on Energy Research (AOER), a research organization dedicated to ensuring that every state in America has affordable, reliable energy. 

“Compliance with the New England Decarbonization Plans would cost $815 billion through 2050,” the report concludes. “New England families would see their electric bills increase by an average of $99 per year. Commercial businesses would see their costs increase by $489 per year. Industrial (manufacturing) customers would see their electric bills increase by an average of almost $5,280 per year.” 

The report shows that on a per-capita basis, the cumulative cost of the plans increases expenses for each person in New England by an additional $2,061 in 2030, $15,552 in 2040, and an additional $51,914 in 2050. All these increases will make New England less affordable.

As the only New England state that doesn’t impose unrealistic electrification mandates for transportation and home heating, New Hampshire offers the only bright spot in the study.

“New Hampshire’s energy policies produce substantial benefits for the entire ISO-NE region,” the study concludes. “The Granite State’s lack of electrification mandates for transportation and home heating reduces the projected peak system demand from 57 GW to 52.5 GW, and the continued use of natural gas provides critical dispatchable capacity for the system, allowing it to perform better during periods of low wind and solar output.”

“New Hampshire’s current energy policies would save all New Englanders $56.5 billion during the time period studied,” the report finds.

Although the organizations that commissioned the study support the goal of achieving a cleaner environment, the report finds that switching primarily to weather dependent “renewable” energy is not entirely feasible for the electrical grid of ISO-New England — an independent, not-for-profit corporation responsible for keeping electricity flowing across the six New England states. 

The study concludes that ISO-New England may be unable to coordinate electricity to power the region within 11 years, warning that “[i]f each of the New England states adheres to the same renewable-intensive path, a blackout scenario could be dire indeed.”

According to the study, powering New England without interruption during a year in which wind and sunshine are plentiful would require 225 gigawatts (GW) of renewables — or equivalent to power generated by 12,000 wind turbines and 129 million solar panels. Even more renewables would be required to power New England in a less sunny or windy year.

New England is responsible for less than 0.4% of global emissions; it is unclear just how much cleaner the environment will become in exchange for the costs that have been imposed on the region and its people.

Ultimately, the report finds that the cost of reducing carbon dioxide emissions under these plans exceeds the benefits of doing so, especially because in many cases, “green” policies have been enacted without any effort to quantify the environmental benefits they will secure. This raises the very real possibility that New England states are imposing net harm on their economies by imposing policies whose costs outweigh their benefits.

Policy Recommendations

1. Reconsider emission-reductions goals in the context of affordability and reliability of electricity. Legislators should prioritize affordability and reliability before emissions reductions goals. If emissions reduction goals cannot be reduced without compromising affordability and/or reliability of electricity, they should be abandoned.

2. Lift state nuclear moratoriums. Lifting moratoriums and impediments to building new nuclear power generators will be the most reliable and affordable way to decarbonize the New England grid. Connecticut, Maine, Massachusetts, Rhode Island and Vermont each have substantial barriers to nuclear energy.

3. Purchase Power Agreement transparency. Any state that mandates contracts for certain types of energy should clearly detail the cost of those contracts for the public. These reports should provide ratepayers with the expected increases (or decreases) in their monthly bills.

4. Allow nuclear to compete with renewables. Net Zero mandates treat renewable energy as more desirable than nuclear energy, despite both producing no carbon emissions. Allowing nuclear energy to be included toward meeting mandates will lower the costs for businesses and households.

5. Require investment fee reporting. Mandatory reporting of investment fees for state governments will allow for more transparency around the cost and benefit of generally higher-risk alternative investments like private equity and hedge funds, which are often used for ESG investments.

To read the full paper, click here: ISO-NE-r4c (final).

About the Authors

Always On Energy Research (AOER) believes every resident in every state has the right to know how much energy policy passed at local, state, and federal levels will cost them in terms of standard of living, including monetary and reliability.

At Americans for Prosperity Foundation, we empower and educate Americans on the proven and principled solutions to our country’s most challenging issues. We believe in people. When Americans have freedom and opportunity, they can achieve extraordinary things. Through education, research, and community engagement we can empower Americans to achieve their full potential.

The mission of the Josiah Bartlett Center for Public Policy is to develop and advance practical, free-market policies that promote prosperity and opportunity for all.

The Ethan Allen Institute’s mission is to influence public policy in Vermont by helping its people to better understand and put into practice the fundamentals of a free society: individual liberty, private property, competitive free enterprise, limited and frugal government, strong local communities and personal responsibility.

Maine Policy Institute is a nonprofit, nonpartisan organization that works to expand individual liberty and economic freedom in Maine. Maine Policy is the strongest voice in Augusta for taxpayers and believes in an open, transparent, and accountable state government.

Fiscal Alliance Foundation in Massachusetts promotes individual liberty and greater fiscal responsibility and transparency in government for a better New England, through education and legal assistance.

The Rhode Island Center for Freedom and Prosperity is dedicated to providing concerned citizens, the media, and public officials in Rhode Island with empirical research data, while also advancing market-based solutions to major public policy issues in the state.

Yankee Institute is the eyes, ears and voice for hard-working people who want a prosperous Connecticut. Our common-sense solutions drive positive legislative results to strengthen our communities and build a vibrant, hopeful future.

QUOTE from AOER:

“The six ISO-NE states are not the only ones grappling with the economically devastating costs and reliability challenges associated with decarbonization goals. Similar issues are emerging in other states, creating a divide between energy ‘haves’ and ‘have nots.’ Our research suggests that the ISO-NE states are likely to fall into the ‘have nots’ category. The positive takeaway is they have the opportunity to change course by revising their energy policies while still maintaining a clean, healthy environment.”

Quote from Josiah Bartlett Center President Drew Cline:

“One of the few bright spots in our study is found in the reliability and cost savings created by New Hampshire’s refusal to impose the most burdensome renewable energy mandates. New Hampshire has shown the rest of New England the value of prioritizing cost and reliability. The clear path forward is for the other New England states to follow New Hampshire’s lead.”

Quote from Maine Policy Institute CEO Matthew Gagnon:

“It’s time for policymakers in Maine and the region to understand there are real human and economic costs to their renewable energy agenda. For a state like Maine, in a region like New England, it simply does not make sense to continue down this path when we account for such a minuscule amount of greenhouse gas emissions. Doing so will cause serious hardship for working families and make our regional grid far less reliable.”

Quote from Ethan Allen Institute’s David Flemming:

“For the past decade, Vermont has passed successively more stringent laws and regulations regarding how electricity can be generated. Ten years ago, the Legislature shut down the Vermont Yankee nuclear plant, which had been responsible for generating three-quarters of Vermont’s in-state generated electricity, all with zero carbon emissions. Vermont now generates less than half of the electricity that it did a decade ago.

Since then, despite millions in wind and solar subsidies to favored companies, Vermont produced only 15% more wind and solar powered in-state generated electricity in 2024 than in 2014. At this rate, it would take over 140 years for Vermont to build enough in-state wind and solar generated electricity to replace the nuclear-generated electricity lost. Wind and solar are simply not affordable and reliable options. With over 170,000 households relying on electricity to power their furnaces, Vermont can ill afford to double down on a failing electricity generation strategy that places thousands at risk of losing electricity during the cold winter months.”

Quote from Yankee Institute Communications Specialist, Andy Fowler:

“It costs more for Connecticut families and businesses to turn their lights on than almost anywhere else in the country. Instead of finding new ways to bring massive amounts of energy onto the grid, lawmakers want it to be 100 percent carbon-free by 2040. A new study, supported by Yankee Institute and other leading state policy organizations, demonstrates that this massive “renewable” overhaul will cost Connecticut residents billions of dollars and be more prone to rolling blackouts while only cutting global carbon emissions by a fraction of a percent. It begs the question, why? Why should we accept a lower quality of life? We can do better. We can grow our economy, improve the environment, and avoid a future when ‘turning on a light’ could be unreliable.”

Quote from Ross Connolly, Northeast Regional Director, Americans for Prosperity Foundation

“Affordable, reliable energy is essential for human well-being.  To ensure New Englanders can maintain and expand well-being all energy solutions should be on the table.  We cannot continue going down the route of picking winners and losers in energy markets. Policymakers should be focused on true progress for their constituents, a future that unleashes American energy abundance to benefit all.  By creating an equal playing field and pursuing diverse energy innovations- whether nuclear, natural gas, or something yet to be discovered- we empower humanity to meet growing demands and set America up for success in the next century.”

Quote from Mike Stenhouse, CEO, Rhode Island Center for Freedom & Prosperity

“The government’s assault on Rhode Island families continues as politicians have recklessly placed our state on a path where residents may soon fear ‘freezing in the dark.’ As our report illustrates, without any cost-benefit analysis or planning to expand our electric grid’s capacity, lawmakers are creating a major self-inflicted crisis. Their reckless zeal to follow a false narrative knows no bounds. This report must serve as a wake-up call to all lawmakers: Ocean State families require a more reasonable energy strategy.”

Quote from Paul Craney, spokesman for the Fiscal Alliance Foundation of Massachusetts:

“New England states should view Massachusetts as a cautionary tale for what not to do with energy policy. The study shows that by 2050, every single person in New England will have paid over $51,000 for these policies. For residents of Massachusetts, we can expect to pay even more. Massachusetts lawmakers have passed overzealous and unattainable, weather dependent renewable energy policies that will hurt, not help, the residents of their state. These policies will also burden surrounding states that share our grid with crippling costs and blackout conditions. This isn’t fear mongering, this is future reality under our current laws. Course correction must be addressed swiftly.

If Massachusetts persists in relying solely on weather-dependent energy sources like solar, wind, and batteries, residents can expect soaring energy costs and the looming threat of rolling blackouts. The outlook is grim for the working people and businesses of our state alike, but entirely avoidable with the right policy changes.”

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Populist policy solutions to empower outsiders

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In the United States and across the globe, a stark political divide has emerged not between left and right, but between outsiders and insiders.

To a large extent, the 2024 election reflects an outsider revolt against elite misuse of institutions. Analysts and writers on both the left and the right have noticed this, though they don’t always read the results the same way. 

Left-wing writer Jeet Heer of The Nation headed down the right path, even if he missed the destination, when he wrote last week:

“The key to understanding the Trump era is that the real divide in America is not between left and right but between pro-system and anti-system politics. Pro-system politics is the bipartisan consensus of establishment Democrats and Republicans: It’s the politics of NATO and other military alliances, of trade agreements, and of deference to economists (as when they say that price gouging isn’t the cause of inflation). Trump stands for no fixed ideology but rather a general thumbing of the nose at this consensus. The main fact of American politics in the post-Obama era is that an ever larger majority of Americans are angry at the status quo and open to anti-system politics.”

That’s not quite right. Voters are angry at the status quo, but they have not turned against “systems” per se. No one’s calling to abolish the Catholic Church, the International Committee of the Red Cross, professional sports leagues, the Salvation Army, Rotary International, 10-minute oil changes, community college, municipal trash collection or the International Fertilizer Development Center.

Voters have turned against elite misuse of powerful institutions, particularly government institutions, to exclude non-elites and impose elite values and decisions on others collectively.

The signs of this have been growing for years. Chapman University in California conducts a Survey of American Fears to catalogue what Americans fear most. The latest survey, from 2022, found that Americans most fear “corrupt government officials.” 

Nearly 2/3 of Americans (62%) said they were afraid or very afraid of corrupt government officials. Another 25.4% said they were slightly afraid. Only 12.5% said they had no fear of corrupt government officials. While 37% said they were very afraid of corrupt government officials, only 16% were very afraid of climate change affecting where they live. (Just 6% were afraid of zombies.) 

If Americans most fear abuse at the hands of government officials, imagine how concerned residents of the “live free or die” state must be.

Collapsing trust in elites and powerful institutions leads to populist efforts to weaken or control (or both) those institutions. 

That loss of trust is a terrible development. But new leaders can restore trust lost by previous leaders. The new governing majority in New Hampshire has a golden opportunity to begin to restore that trust.

How? The wrong way would be to use government power to lock in a different set of controls that create different sets of insiders and outsiders. Voters want to restore the principle of institutional neutrality. They want government to treat everyone equally and stop “picking winners and losers,” as the common phrase goes.

In New Hampshire, policymakers can restore trust by removing institutional rules that create insiders and outsiders where none need exist, or that erect unnecessary barriers that make it harder for outsiders to choose their own path in life.

The best opportunities to return power to individual Granite Staters come with these five steps:

  1. Reduce state and local land use and development regulations. Our 2021 study of local land use regulations showed that New Hampshire is more heavily regulated in this category than most other states. Regulations that needlessly restrict development are not only the primary cause of the state’s housing shortage, but they prevent developers from creating the kind of communities people prefer, price lower-income families out of neighborhoods and communities, worsen labor shortages, and generally replace individual preferences with choices made by small groups of insiders.
  2. Increase access to educational options. Nearly everyone agrees that a child’s zip code shouldn’t determine his or her educational opportunity. Our current public education structure locks children in to a boundary-based model that creates insiders and outsiders by its very design. Education Freedom Accounts (EFAs), universal open enrollment and charter schools eliminate that structural flaw. Curiously, news reports on Education Freedom Accounts continue to omit the fact that EFAs can be used to attend public schools. Only by empowering families to shop for an education can we generate the public education improvements parents have demanded for decades.
  3. Reduce regulatory burdens on businesses and entrepreneurs. Making it harder and more expensive to start and operate a business hurts outsiders and protects larger businesses. New Hampshire has too many state and local regulations that raise barriers to entry, increase costs and create public “protections” that no one even needs. Entrepreneurship is one of the most important paths to prosperity. In New Hampshire, starting and running a business should be easier than anywhere else on earth. Right now, we’re not even close.
  4. Roll back overly burdensome environmental regulations. Protecting land, water and air is a legitimate role of government. Doing it the wrong way is costly and counterproductive. When regulations become absurdly complicated or expensive, they suppress economic growth, which is harmful because economic growth benefits everyone. New Hampshire can streamline its permitting processes and reduce its regulatory regime in ways that will improve economic outcomes while maintaining essential protections. In this category, renewable energy mandates are entirely unnecessary and should be repealed altogether. Restrictions on building energy infrastructure also need to go.
  5. Reform occupational licensing. Gov. Sununu and the Legislature made real progress on this in the last legislative session, but much work remains. New Hampshire continues to place too many regulatory obstacles in the way of individuals who want to enter dozens of career pathways.

New Hampshire is layered with rules that replace property rights and individual autonomy with decisions made by small groups of elites. Voters have indicated a strong preference for removing such restraints.

State and local policymakers have a rare opportunity to deliver real reforms that constrain government and empower individuals, rather than the other way around. Failure to deliver such reforms would risk further alienating voters and eroding trust in government.

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Debunking five myths about N.H.’s business tax cuts

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Nine years after the state began reducing business tax rates, five narratives are driving the policy discussion of those cuts. All five are false.  

In a new briefing paper, we debunk the five most common myths about the business tax cuts that ran from 2015-2022.

Background: From 2015-2022, legislators cut the Business Profits Tax from 8.5% to 7.5% and the Business Enterprise Tax from 0.75% to 0.55%. Opponents predicted that the cuts would starve the state of revenue, resulting in defunded programs, lower public school spending, and reduced aid to local governments. 

Those predictions continue to be asserted as fact. Official state data prove them false. 

Note: State spending numbers extend through FY 2025, but audited revenues are complete only through FY 2023. For that reason, we use revenue data only through FY 2023. 

Myth No. 1: Business tax cuts resulted in lower business tax revenues. 

Fact: Revenues from business taxes have more than doubled since the tax cuts began, rising by 124% from state Fiscal Years 2015-2023.

Source: State Comprehensive Annual Financial Reports, 2015-2023.

Myth No. 2: Business tax cuts reduced the share of state revenues paid by businesses. (“Businesses aren’t paying their fair share.”)

Fact: The share of state tax revenues generated by business taxes rose by 56% from 2015-2023. The share of total state revenues, including federal funding, paid by businesses rose by 40%.

Source: State Comprehensive Annual Financial Reports, 2015-2023.

Myth No. 3: Business tax cuts resulted in lower state aid for local governments and public schools.

Fact: State aid to local governments increased by $214 million from Fiscal Years 2015-2025, or 19%.

Source: Office of Legislative Budget Assistant report, “State Aid to Cities, Towns and School Districts Fiscal Year Ending June 30, 2024,” Oct. 1, 2024.

Myth No. 4: Business Tax Cuts reduced aid to public schools, resulting in property tax increases.

Fact: State aid to public schools increased by 15% from 2015-2024. (Both adequate education grants and total aid to public schools increased by 15%.) At the same time, public school enrollment fell by 16,373 students, or 9%, resulting in average per-pupil state aid rising by 26%, from $5,115 in 2015 to $6,469 in 2024.

Source: Office of Legislative Budget Assistant report, “State Aid to Cities, Towns and School Districts Fiscal Year Ending June 30, 2024,” Oct. 1, 2024, Department of Education Average Daily Membership reports, 2014-2024. *State adequate education aid is based on the prior year’s enrollment.

Myth No. 5: Revenue declines caused by business tax cuts are the reason for projected revenue shortfalls in Fiscal Year 2025.

Fact: Business tax revenues and total state revenues are dramatically higher, not lower, since 2015. However, from 2015-2025 legislators increased spending to match revenues. Had spending simply grown at the rate of inflation, slower revenue growth would not be an issue in 2025. 

Note: “Total State Revenue” in the chart below refers to revenue from state sources, excluding federal funds. 

Download this briefing paper here: Business Tax Cut Myths 2024.

 

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Business tax cuts did not reduce state aid to local governments

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Since New Hampshire began cutting business tax rates in 2015, state aid to municipalities and public school districts has fallen, according to a prominent political narrative. 

That narrative is false.

Aid to local governments and local school districts rose by by $214 million (19%) from Fiscal Year 2015 to Fiscal Year 2025, an October report from the Office of Legislative Budget Assistant shows.

A related false narrative asserts that if state aid to localities is up, that’s only because of federal COVID relief spending. 

This also is false. 

The $214 million increase in state aid consists entirely of state tax revenue. Federal COVID relief money and all other federal spending are separate. 

What about school districts? 

The state has increased adequate education grants and total state aid to public school districts since 2015. 

State adequate education aid rose by $139 million (15%).

Total state aid to public school districts rose by $148 million (15%). 

While state aid to public schools increased by 15%, public school enrollment fell by 16,373 students, or 9%. 

So although the total dollar increase might look relatively small, it is spread among fewer students, creating a larger per-pupil expenditure.

Looking only at state adequate education grants, the state government sent local public schools an average of $5,115 per pupil in 2015. That rose to an average of $6,469 per pupil in FY 2025 (the current school year), an increase of 26%.

Inflation over the last decade grew faster than the increase in state aid to local governments and school districts, eating away at the value of those increases. 

But the claim from tax cut opponents is not that the hundreds of millions of dollars in additional aid was consumed by bad federal policies that sent inflation soaring. The claim is that the state cut local aid in absolute terms because state revenues fell following the tax cuts. This is entirely untrue.

Not only did legislators increase local aid, those increases were funded by soaring business tax revenues, which have more than doubled since 2015. 

Local governments and public school districts received $214 million in additional state aid over the last decade, including a 26% increase in the per-pupil value of adequate education grants. If they raised property taxes during this time, the blame cannot be placed on state aid.

These increases do not include any of the $112 million in Local Fiscal Recovery Fund moneys distributed to towns, $994.5 million in American Rescue Plan and Coronavirus State Fiscal Recovery Funds allocated by the state, $486 million in ESSER funding for public schools, or other COVID relief funds sent directly from the federal government to cities. 

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After tax cuts, businesses pay a larger share of state revenue

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Businesses not paying their fair share. Shrinking state revenues. A tax burden shifted from businesses to property tax payers. 

Those were the predictions critics have made since 2015, when New Hampshire legislators began a series of business tax cuts. 

Not only did those predictions fail to materialize, but the exact opposite happened.

Since the rate cuts began, businesses tax revenues for the state General and Education Trust Funds have more than doubled, from $561.7 million to $1.2 billion.

And the share of state government revenues paid by businesses has risen, while the share paid by property taxpayers has fallen by more than half.

 

Business shoulder larger share of state revenues

New Hampshire has two primary business taxes, the Business Profits Tax (BPT) and the Business Enterprise Tax (BET). Starting in 2015, legislators began to cut these tax rates. 

From 2016-2022, legislators cut the BPT rate from 8.5% to 7.5%, and the BET rate from 0.75% to 0.55%. 

In Fiscal Year 2015, the last year before these rate cuts took effect, business taxes accounted for 11% of total general government revenues, the state’s Comprehensive Annual Financial Report shows. (These exclude business activities such as liquor sales, lottery sales, toll revenue and unemployment insurance taxes.)

In Fiscal Year 2023 (the last year for which we have final, audited data), business taxes accounted for 15.4% of total general government revenue, a 40% increase, the state’s Comprehensive Annual Financial Report shows.

At the same time, the share of total general government revenues paid through general property taxes fell by more than 50%. General property taxes comprised 8% of general government revenues in FY 2015 and just 3.6% in FY 2023. 

Those figures include federal funding. Restricting the analysis to state General and Education Trust Fund revenue alone, the increase is even more pronounced.

In 2015, business tax revenues accounted for 25% of General and Education Trust Fund revenue.

In 2023, they accounted for 39%, a 56% increase over 2015.

In fact, business tax revenues alone in 2023 ($1.26 billion) were larger than the entire Education Trust Fund in 2015 ($895 million) and nearly as large as the entire 2015 General Fund budget ($1.3 billion).

Opponents of the business tax cuts continue to claim that they resulted in businesses not paying “their fair share.”

In fact, businesses’ share of General and Education Trust Fund revenues rose by 56%, and their share of total general government revenues rose by 40%. Any way you do the numbers, businesses now pay a much larger share of state revenues than before the tax cuts began.

Smaller tax changes

Some smaller tax changes were made during these years, but they are too small to account for this shift in state budget burden from property taxpayers to businesses. 

For example, legislators eliminated the Electricity Consumption Tax in 2017, effective in 2019, and trimmed the Rooms & Meals Tax by half a percentage point in 2019. Legislators also began to phase out the Interest & Dividends tax by reducing the rate from 5% to 4% in 2023, then to 3% in 2024, and to zero in 2025. 

The Electricity Consumption Tax collected roughly $6 million a year before it was eliminated. And Rooms & Meals Tax revenue did not decline, but increased from $341.6 million in FY 2018 to $464.3 million in FY 2024, according to the Department of Revenue Administration 2024 Annual Report. Though Rooms & Meals Tax revenue rose by more than $100 million, its share of state revenues fell from 5% to 3.7% from 2015 to 2024. 

Interest & Dividend Tax revenue fell slightly, from $156.4 million in FY 2022 to $150.6 million in FY 2023, before spiking to $184 million in FY 2024.

These comparatively small changes cannot explain the shift in tax burden toward businesses.

Increasing business activity

The increasing share of state revenues paid by businesses is primarily the result of a booming economy and rising business profits.

The number of businesses in good standing registered with the state increased from 160,000 in 2015 to 188,000 in 2022, the last year for which the Department of Revenue Administration has posted complete data (a 17.5% increase).

The number of businesses filing a return rose by 3,174, or 4.4%, while the number making a business tax payment rose by 5,401, or 12.4%.

These figures indicate that New Hampshire’s growing economy generated increased business formation and business activity. In other words, more businesses made more money, which generated more state revenue.

In short, businesses now pay a significantly larger share of state revenues, while a lower share comes from property tax payers–exactly the result progressives said they wanted to achieve by raising business taxes.

 

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Freedom’s just another word for everything to lose

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Among his many memorable contributions to American arts, the great singer-songwriter Kris Kristofferson, who passed away in September, wrote one of the most quotable lines in rock history.

“Freedom’s just another word for nothing left to lose.”

It’s a fabulous drifter anthem. 

It’s also entirely wrong. 

Part of the American political left at the time was infused with a hippie ethos that disdained possessions and social connections. Freedom to them meant getting “back to the garden,” to quote another anthem of the era. 

They should’ve read fewer radical poets and more Enlightenment philosophers.

Ancient humans had “nothing left to lose” in the sense that they had few possessions. Life was a pretty big thing to lose, though, and life in a state of nature was not exactly full of lattes and free health care. If you were lucky enough to survive childhood, you still had to escape war, pestilence, famine, all the Old Testament stuff.  You were only free until someone more powerful came along and subjugated you. And then there were no U.S. Marines to come to the rescue.  

For most of human history, either chaos or subjugation was the rule for most of humanity. Humans spent millennia poor and unfree. 

The development of democratic governments along with institutions that decentralized power and incentivized innovation and upward mobility changed everything. 

When humans replaced extractive institutions dominated by elites for inclusive institutions that empowered outsiders, as MIT economist Daron Acemoglu concisely frames it, an unprecedented era of human flourishing began.

In 1820, 75% of the world’s population lived in extreme poverty, as the chart below from Our World In Data shows. By 2018, only 11% did. 

“For most of human history, life expectancy has been short – perhaps 25 years for our hunter-gatherer ancestors and only 37 years for residents of England in 1700,” a paper by Harvard, Princeton and UCLA researchers in 2011 determined. “Dramatic changes began in the 18th century, with life expectancy in England rising to 41 years by 1820, 50 years by the early 20th century, and 77 years today.”

In the past 13 years, life expectancy in England has risen to 80.

Economic growth more than tripled human life expectancy and has nearly eradicated extreme poverty.

“Economic growth made it possible to leave the widespread extreme poverty of the past behind,” Oxford University professor Max Roser writes. “It made the difference between a society in which the majority were lacking even the most basic goods and services – food, decent housing and clothes, healthcare, public infrastructure and transport – and a society in which these products are widely available.”

What economist Dierdre McCloskey calls “the great enrichment” was driven by a surge in economic growth, but what drives economic growth? 

Acemoglu notes that short bursts of economic growth have occurred under authoritarian regimes throughout history. But, like the people, they were short-lived. Why?

“Authoritarian systems often rely on some amount of repression, because they seek to maintain an unequal distribution of political power and economic benefits. They also adopt economic institutions and policies that protect incumbents and create rents for those who hold political power,” he wrote in his epilogue to Introduction to Modern Economic Growth.

He found that “a distinguishing feature of growth under authoritarian institutions is that it protects the interests of the current elite. So in the final analysis, growth must always rely on existing techniques and production relationships. It will not unleash the process of creative destruction and the entry of new talent and new businesses necessary to carry a nation to the state of sustained growth.”

The entry of new talent and new business (and new ideas) is crucial for raising living standards and for maximizing individual autonomy (freedom). 

Institutions and policies that seek to protect insiders by suppressing competition, innovation and freedom of individual action hurt economic growth by curtailing freedom and thus limiting opportunity for outsiders. 

Democracy alone does not protect against such collusion by insiders. Even in democratic regimes, special interests pressure ruling authorities for protections against outsiders. 

Such protections remain woven into American and New Hampshire laws even today. 

From tariffs and confiscatory tax rates at the national level to occupational and business regulations at the state level to housing restrictions and food truck bans at the local level, regulation and taxation continue to slow economic growth and reduce opportunities for average folks. 

Building an inclusive, prosperous society requires reducing the barriers that insiders erect to protect their own power and status from being challenged by outsiders. 

When insiders collude with government to extract resources from an unfavored group or to protect favored groups from competition or innovation, freedom, opportunity and prosperity are diminished.

The Josiah Bartlett Center for Public Policy advocates for expanding free markets and limiting government coercion because these are proven methods of maximizing freedom, opportunity and prosperity for all Granite Staters. 

Government maximizes freedom not by redistributing wealth after its creation, but by supporting institutions and policies that lift restraints on individual economic autonomy, thus empowering all citizens regardless of social, political or economic status to pursue happiness on their own terms (providing they don’t harm others). 

Such inclusive institutions maximize individual freedom, incentivize innovation and stimulate growth and prosperity. 

Free markets and limited, inclusive government generate maximum amounts of widely shared prosperity by unleashing the full measure of human potential.

It’s no accident that the “live free or die” state is rated No. 1 in economic freedom in North America and has the nation’s lowest poverty rate. 

It’s no accident that New Hampshire has enjoyed historically higher economic growth than Vermont or Maine, and thus has higher household and per-capita income, despite sharing similar geographic and demographic characteristics. 

Free markets and limited, inclusive government make everyone freer and more prosperous.

Freedom is the foundation of sustainable prosperity.

Or to put it another way, freedom’s just another word for everything to lose.

Lose freedom, and all of our modern prosperity collapses.

Acemoglu documents this collapse in numerous authoritarian regimes of the past. People would win a little freedom, which would cause a spurt of growth, which challenged established elites, who responded by restricting freedom, which ended the growth.

From the Mayans to the Romans to the Soviets, the cycle was repeated.

Lose freedom, lose prosperity.

That’s why the Josiah Bartlett Center fights for policies that expand economic freedom. 

If you’d like to help us raise living standards and create greater opportunities for all Granite Staters, you can make a contribution online here. It’s an investment in a freer, more prosperous New Hampshire for everyone.

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In N.H., you can’t tax “the rich” or “big businesses” without taxing the little guy too

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It’s election season, and once again progressives are advocating higher taxes by claiming that legislators over the last decade have cut taxes for “big businesses,” “large, out-of-state corporations” and “millionaires and billionaires.” 

These claims are intentionally misleading. They rely on voter ignorance about New Hampshire’s tax system to create the impression that lawmakers in recent years cut taxes only for big businesses and the wealthy. That didn’t happen. In fact, in New Hampshire, that’s unconstitutional.

Unlike the federal government, New Hampshire does not have a progressive personal or corporate income tax system. New Hampshire’s income tax (on interest and dividends) and its corporate taxes are all flat taxes. That is, everyone who pays these taxes pays the same rate.

The New Hampshire Constitution in Section 2 Article 5 mandates “proportional” taxation. Basically, that means that everyone has to pay the same rate. 

Our business taxes and state income tax reflect this constitutional constraint.

Since 2015, legislators have reduced business tax rates. In January the Interest & Dividends Tax ends. All of these cuts were to the flat rates, meaning that they applied to every payer of those taxes, regardless of wealth, equally.

The Business Profits Tax (BPT) rate was reduced from 8.5% in 2015 to 7.5% today. Every business “carrying on business activity in the state” that has at least $103,000 in gross business revenue must pay 7.5% of its profits in taxes to the state. 

Department of Business Administration data show that in 2022, 73.2% of BPT filers paid no tax. Ninety-four percent of BPT filers in 2022 paid less than $100,000 in business profits taxes. To pay $100,000 in BPT would take about $1.33 million in annual profit.

Financial website bankrate.com notes that U.S. small businesses vary in size and revenue, having “a large range depending on the industry, with small businesses generating on average between $1 million (or less) and $41.5 million in annual revenue.”

Though most small businesses have no employees, financial website Motley Fool reports that the ‘average employer small business makes over $6 million a year.”

That might be surprising, but the U.S. Small Business Administration defines a “small business” as one with up to 500 employees.

You might hear that most business tax revenue in New Hampshire is paid by large corporations. But that doesn’t mean they pay a higher rate. They pay the same rate as all other businesses. They account for a large percentage of tax revenue because they’re just so large.

Of the $810.5 million in BPT revenue in 2022, $621.4 million came from companies that paid more than $100,000 in business profits taxes. All of that money was generated by only 1,152 companies. The remaining BPT revenue was paid by 19,146 businesses. And whether they paid $1 or $1 million, they all paid the same 7.5% rate. 

Because more revenue came from larger corporations, progressives claim that the BPT is “paid mostly by large, out-of-state corporations.” In truth, 93% of BPT payers are smaller businesses that pay less than $50,000 in business profits taxes, which means they had profits of less than about $670,000. And 92.9% of BPT tax filers were domestic New Hampshire businesses. Only 7.1 percent were companies based out of state in 2022. 

Those out-of-state companies paid $58.4% of all the business profits taxes collected that year. (How many times do you shop at Target or Walmart?) But they represented a small fraction of all BPT payers. 

The Business Enterprise Tax is a tax on “all compensation paid or accrued, interest paid or accrued, and dividends paid by the business enterprise” after certain deductions are met. It was cut from 0.75% in 2015 to 0.55% in 2024. 

This tax is paid on gross receipts or enterprise value of at least $281,000. Companies that qualify pay this tax even if they have no profits.

Fully 96% of BET payers paid less than $100,000 in 2022. Out-of-state corporations paid 49.7% of BET revenue in 2022, but made up only 7.1% of filers, again showing that the vast majority of companies that paid the tax are New Hampshire companies.

The Interest & Dividends Tax is not a business tax per se, but it is paid by business owners who take dividends from limited liability companies and partnerships. Progressives claim that this tax, which phases out at the end of 2024, is paid by “millionaires and billionaires.” But, again, it’s one rate for all payers. And 73.5% of those who made an I&D Tax filing in 2022 paid less than $1,000.  

The I&D Tax rate in 2022 was 5%. (It is 3% this year, before disappearing in 2025.) That 73.5% of filers includes 14,252 people or entities who owed no tax but had to file. Counting just those who paid the tax, 54% paid less than $1,000.

These figures indicate that this tax is paid primarily by people who aren’t necessarily millionaires. At a 5% rate, someone paying $1,000 in this tax would have a dividend or interest payment of $20,000. That’s what one would earn on $400,000 invested at a 5% rate of return. Surely some of those people are millionaires, but it would be inaccurate to say that the tax is a millionaire’s tax.

Taxing “the rich” means fundamentally changing NH’s tax code

If a politician says she wants to raise taxes only on big businesses or millionaires and billionaires, that can mean one of only three things. 

  1. She doesn’t understand the state’s tax system at all.
  2. She wants to replace New Hampshire’s flat taxes with a new, progressive tax system. 
  3. She wants to keep New Hampshire’s flat taxes but raise the thresholds so that only big corporations and millionaires pay any taxes.

We can probably rule out option three. Progressives who lament the recent tax cuts say the cuts reduced state revenue. They didn’t. State revenue has boomed since 2015, and the last fiscal year brought in record revenue. But eliminating all taxes for the vast majority of business taxpayers and I&D Tax payers certainly would cause a drop in revenues. 

Option one is always a possibility. 

Option three, however, is where reporters and voters should focus. If a candidate for state office says she wants to raise taxes only on the wealthy or large businesses, the obvious question is: how?

New Hampshire’s constitution prohibits taxing people at different rates. Anyone who proposes to raise revenue by taxing only the rich or big businesses must admit one of two possibilities:

  1. They want to raise taxes on all businesses or all qualifying investors;
  2. They want to amend the constitution and create an entirely new progressive tax system with higher rates for higher-income individuals and larger businesses.

Those are the only options, assuming the goal is to raise more revenue.

Reporters and voters really should call candidates and high-profile activists out on this. If they did, it could end, or at least reduce, a lot of the deliberately misleading tax talk that comes up every election season.

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