Eight U.S. states have no income tax. 

New Hampshire is not one of them.

The Interest & Dividends tax lingers. A tax on passive income is still a tax on income, and this one has given New Hampshire an asterisk by its name when listed among the nation’s low-tax states.

At midnight on Dec. 31, 2020, Tennessee’s tax in interest and dividends ended, making it the eighth state with no tax on income. Six months later, New Hampshire legislators passed a budget that included a five-year phase out of our Interest & Dividends Tax.

But with policymakers in other states chasing the New Hampshire Advantage ever more aggressively, there is interest in eliminating the I&D Tax by the end of 2023 rather than 2026. 

Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming are the only states that don’t tax income. (Washington passed a capital gains tax in 2021 but it’s been blocked by a court pending a challenge to its constitutionality.)

Florida, Tennessee and Texas all want to become known as the freest state in the nation. Florida Gov. Ron DeSantis already refers to the Sunshine State as the “Free State of Florida.” 

New Hampshire is losing its reputation as a refuge from burdensome taxation.

In the Tax Foundation’s State and Local Tax Burdens ranking, Tennessee ranks third, Texas sixth and Florida 11th. New Hampshire is down to 16th place. 

Florida ranks higher than New Hampshire in the Tax Foundation’s Business Tax Climate Index. It places fourth. New Hampshire is sixth. 

Florida last year passed New Hampshire to claim the top spot in the Fraser Institute’s Economic Freedom in North America report. 

The New Hampshire Advantage is real. By creating a low-tax, relatively low-regulation refuge in the Northeastern United States, New Hampshire policymakers have delivered profound benefits for Granite Staters. 

From 1977-2019, New Hampshire’s economy grew by an astounding 335%. Massachusetts had the second highest economic growth in New England at 234%, a full hundred percentage points below New Hampshire.  The U.S. economy grew by 203% in those same years.

This growth has given Granite Staters the highest median household income in northern New England, 25% higher than Vermont’s and 35% higher than Maine’s. 

Over those years, however, officials in other states have watched and learned. They’re chasing — and often passing — New Hampshire.

After the eight states with no income tax are the nine states with a flat income tax. New Hampshire is in this group, which used to be very small but is growing rapidly. 

Five other states have passed legislation to move to a flat income tax. Others, including North Carolina, are phasing out their income taxes on the way to joining the elite group of states with no tax on income. 

Policymakers in these states are intentionally trying to keep their people, employers and entrepreneurs — and attract those in other states — by narrowing the gap between their tax burden and the burdens in states like New Hampshire. 

In other words, they are trying to put an end to the New Hampshire Advantage by creating a tax and regulatory environment more favorable than ours. 

Having the Interest & Dividends Tax on the books is hurting New Hampshire in this increasingly competitive landscape. Investors, retirees and many entrepreneurs know that they gain nothing financially by moving to New Hampshire because we tax their investment income. 

Even AARP has pointed out to its members that New Hampshire is a less desirable place to retire than Florida, Tennessee, Texas or any of the other truly income-tax-free states because we tax investment income. 

“Nine states — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming — have no income taxes. New Hampshire, however, taxes interest and dividends, according to the Tax Foundation,” AARP’s website warned its members in a post last year. 

Turbotax warned its users in December that New Hampshire taxes passive income. After listing the states with no income tax, it noted that “New Hampshire limits its tax to interest and dividend income, not income from wages.”

Maintaining the Interest & Dividends tax creates a small but real drag on both economic and population growth. 

“Over the past decade, states which forgo income taxes have seen their populations grow at twice the national rate, and gross state product grew 56 percent faster in states without an income tax than it did in those with one over that period,” the Tax Foundation noted in 2021. 

As long as this tax remains on the books, it discourages relocation to New Hampshire by individuals who could use their assets to invest in local start-ups, commercial and residential real estate development, and local non-profits. 

It also chases away wealthier Granite Staters and retirees. When financially successful Granite Staters move to Florida and Tennessee to avoid the Interest & Dividends Tax, New Hampshire loses. 

The most commonly made objection to ending the Interest & Dividends Tax is that it would reduce state revenues. But i’s unclear how much revenue the state would lose.

Revenue from the I&D Tax has varied over the last decade. The tax brought in $93 million in fiscal year 2013, and fluctuated between a low of $79.8 million and a high of $96.9 million through fiscal year 2017. Since fiscal year 2018, the tax has generated more than $100 million in revenue annually, spiking to a record $157.5 million in fiscal year 2022. 

The 2022 revenue was driven by unusually large stock market gains that year.

Assuming annual revenues in the $100 million to $125 million range, the question is whether the state could weather the loss of those funds without making severe budget cuts. The answer is obviously yes.

For the last decade, state General Fund and Education Trust Fund revenues have exceeded budgeted amounts in every year save one. Revenues were $435.5 million above plan in FY 2022, $323.7 million above plan in FY 2021, $173 million above plan in FY 2019, $133 million above plan in FY 2018, $96 million above plan in FY 2017, $166 million above plan in FY 2016, $47 million above plan in FY 2015, $3.8 million above plan in FY 2014, and $45.7 million above plan in FY 2013.

In the last decade, revenues were below plan only during the pandemic year of 2020, when the sharp decline in business activity caused business tax and rooms and meals tax revenue to plunge. 

New Hampshire’s growing economy has already generated enough surplus state revenue to replace the I&D Tax receipts. 

And eliminating the I&D Tax would end a strong disincentive for higher-wealth individuals to live in New Hampshire. Making the state more attractive to investors and entrepreneurs would have positive economic effects, which would be felt in state revenues over time.

Accelerating the repeal of the I&D Tax would make New Hampshire more attractive to retirees, investors and entrepreneurs by the end of this year. If the state can afford to eliminate the tax now, why wait three years to enjoy the benefits of making New Hampshire more economically competitive?

Unless you’re still growing your pandemic beard, you might’ve noticed that getting an appointment with your barber or stylist seems to take longer than it did before the pandemic. 

It’s not all the extra alcohol you got accustomed to consuming on a weekly basis since 2020. The supply of barbers, hairdressers, hair stylists and cosmetologists in New Hampshire really has shrunk in the last several years. As with so many other occupations, the demand for these services exceeds the supply of providers.

And as with so many other areas of the economy, the shortage is made worse by government regulations. 

Fortunately, there’s a simple tweak to state licensing laws that would encourage more licensed personal grooming professionals to move to New Hampshire. 

Barbers, cosmetologists and estheticians are licensed by the state, and the law regulating these professions does not automatically recognize as valid licenses earned in other states. 

RSA 313-A:14 authorizes the Board of Barbering, Cosmetology and Esthetics to recognize an out-of-state license “provided the other state’s licensing requirements are substantially equivalent to or higher than those of this state.”

Sounds harmless. But it’s not. 

It’s not clear how the board is to determine whether a license is “substantially equivalent to” the qualifications for a New Hampshire license. States require varying hours of education and training, but also varying numbers of tests and varying levels of experience. One state’s program might be more effective than another’s even though it requires months’ less training. 

Economists who’ve studied license portability generally prefer blanket license reciprocity. Stephen Slivinski at Arizona State University has studied occupational license portability among the states and found that the general “lack of license portability has real-world impacts. It keeps workers from moving to a state when they might otherwise. Lack of portability is also especially onerous for ‘trailing spouses’ of military members who are often kept out of the workforce when their family is transferred to a new state.”

“Getting a new license requires costly, time-consuming, and duplicative hours of training just to do the job that the worker was already doing before they moved across the state border. As a result, the lack of occupational licensing portability suppresses the labor market opportunities for new residents of a state. Additionally, it has the effect of discouraging people from moving to a new state at all.”

This is a serious issue for New Hampshire, which is suffering a years-long labor shortage. That shortage includes these licensed occupations. 

New Hampshire Employment Security has a single occupational classification that covers hairdressers, hairstylists, and cosmetologists. In 2021, the last year for which the state has published data, the total number of hairdressers, hairstylists and cosmetologists in New Hampshire was 1,860. 

In 2017, the number was 2,020. We lost 160 positions in these occupations in four years, even as New Hampshire’s population was growing.

House Bill 409, sponsored by Rep. Diane Pauer, would help to fill that shortage by making it easier for licensed professionals in these fields to move to New Hampshire and begin work immediately, without having to spend hundreds of hours and thousands of dollars to be retrained in the field in which they’ve already been trained.

HB 409 would remove from state law the clause that grants barber, cosmetology and esthetics license reciprocity only when the practitioner’s home state license requirements are “substantially equivalent to or higher than” New Hampshire’s.

What would this change do? 

Well, for barbering, New Hampshire has among the lowest hours-of-education requirements in the nation. We require 800 hours of training to become a barber. Only four states require fewer hours, according to licensing data compiled by the Institute for Justice (IJ). 

One of them is New York, which requires just 291 clock hours of training to become a barber. One could easily argue that this requirement is not substantially similar to New Hampshire’s. But does anyone actually believe that Manhattan barbers pose a danger to New Yorkers, or that a licensed barber who moves from New York to New Hampshire is a danger to Granite Staters?

Vermont, Florida and Oregon also mandate fewer hours of barber training than New Hampshire does.

For cosmetology, New Hampshire requires 1,500 hours of training. Eight states require fewer hours, including Massachusetts and Vermont (both 1,000 hours). California, New York, New Jersey and Florida also require fewer hours of training than New Hampshire, according to IJ’s data. 

Again, it would be absurd to argue that cosmetologists in New York, New Jersey, California, Massachusetts and Vermont are so dangerously undertrained that they should be forbidden from working in New Hampshire. If you’re qualified to cut Sarah Jessica Parker’s hair, you’re surely qualified to cut Jeanne Shaheen’s or Maggie Hassan’s.

Though only a handful of states require fewer hours of training for these occupations, they include some of our neighbors and other states not far away. HB 409 would remove the entirely unnecessary equivalency language and allow licensed professionals in Massachusetts, Vermont, New York and a few other states to relocate here and start working right away. 

This change is unlikely to eliminate the shortage of barbers and hairstylists right away. But it would remove one obstacle that needlessly prevents some professionals from moving here. 

New Hampshire’s view of national politics is distorted by the presidential primary. The distortion is so strong that sometimes we fail to see broader national trends until they become part of a narrower story about presidential ambitions.

Gov. Chris Sununu’s 2023 inaugural address is a perfect example. The speech stands on its own as a statement of what we might call New Hampshire exceptionalism.

“Over the last six years, New Hampshire has become an island of freedom surrounded by highly taxed, highly regulated states.

“We are a harbor for citizens fleeing the states they once called home in pursuit of our Live Free or Die way of life.

“We continue to open up doors of opportunity, giving families the freedom to choose the path that best suits their needs.

“We have provided leadership that puts ‘The Individual’ ahead of ‘The System.’ Ensuring that everyone — regardless of income, gender, race, or religion – has the same opportunities to succeed.”

The speech drew immediate comparisons with Florida Gov. Ron DeSantis’ 2023 inaugural address, delivered two days before.

Both governors cited studies that rated their states high in measures of economic and personal freedom, and quality of life. Both portrayed their states as refuges for free people fleeing the grip of heavy-handed government in neighboring provinces.

DeSantis and Sununu are being discussed as potential rivals for the 2024 Republican presidential nomination. So the similarities in their speeches were taken by many as evidence of their ambitions.

There’s obvious merit to such observations. And yet presidential ambition can’t entirely explain these speeches. Something larger — and more important — is at work here.

Governors listing their state’s accolades is nothing new. Maggie Hassan touted New Hampshire’s national rankings in her 2013 inaugural address. What’s most noteworthy this year is how similar Florida’s and New Hampshire’s ratings are.

As we’ve written before, Florida and New Hampshire have become rivals for the top spot in the Fraser Institute’s Economic Freedom in North America report. (In 2021, New Hampshire ranked No. 1, Florida No. 2. They switched places in 2022.)

That’s not an accident. Florida’s elected officials have spent many years striving to improve their state’s economic position relative to rivals such as New Hampshire, Texas, Tennessee and North Carolina.

This is how Rick Scott began his inaugural address in 2011:

“We gather today to talk about Florida’s future.

“To assess where we are . . .

“To define where we want to go . . .

“And to plan how to get there.

“Clear goals and hard work can achieve amazing things.

“The giant oak trees that surround us here

“ARE what they ARE

“Because acorns had a plan.

“Once we take the right steps, I am absolutely convinced that Florida will become the most exciting place in the world to live and work.

“Let’s begin by facing squarely the challenge of our time-a stalled economy.”

Scott said moments later, “job creation is a MISSION.”

He proposed to cut taxes and regulations, reform the bureaucracy, and expand educational opportunities.

Four years later, in his 2015 inaugural address, he touted the 700,000 jobs Floridians had created.

National rankings of the kind Sununu and DeSantis cited are metrics by which governors increasingly finding themselves measured — by themselves, their rivals and voters.

It’s difficult to say how much these rankings guide governors and legislators. As college rankings have been shown to influence university administrations, it’s likely that these now constant state rankings do help to shape policy.

And they appear to be focusing state leaders on policies that stimulate economic growth, and for good reason. Policies that lead to growth lead to better economic and social outcomes, which then lead to higher rankings.

Economic growth creates jobs, raises incomes and improves health and well-being. As Veronique de Rugy wrote last week:

The economy grew at an average of 3.5% between 1950 and 2000. Since 2000, that rate has slowed to 1.7%. The cost of lower growth is real. John Cochrane does the math for us: “If the U.S. economy had grown at 2% rather than 3.5% since 1950, income per person by 2000 would have been $23,000 not $50,000.”

What policy other than economic growth has the power to double the average American’s living standard in a generation? None. And here’s the cherry on top: All the stuff an advocate anywhere on the political spectrum claims to value—good health, clean environment, safety, families and quality of life—depends on higher growth.

Faster economic growth is likely to engender even greater benefits for the bottom 50% of the income distribution, which contains young people just starting their careers, retirees trying to stretch their fixed incomes with part-time work, and those populations that are caught in intergenerational cycles of poverty. And this is true everywhere in the world. As Harvard University’s Dani Rodrik rightly sums up, “Historically nothing has worked better than economic growth in enabling societies to improve the life chances of their members, including those at the very bottom.”

Governors have caught on. Because they want to end their terms with wealthier, happier people, they’ve become more aggressive in their pursuit of growth-focused economic policies.

In his 2015 inaugural address, Arkansas Gov. Asa Hutchinson proposed cutting taxes and improving public education to “compete and win in this global marketplace.”

In his 2021 State of the State address, Texas Gov. Greg Abbott boasted of his state’s top national rankings and said the government had a duty to “keep Texas the freedom capital of America.”

Even governors of states that are losing population and businesses are finding ways to claim the title of most free state. California Gov. Gavin Newsom last week claimed his was the “true freedom state.”

In some states, legislators are leading the way. Last year, North Carolina celebrated its CNBC ranking as “America’s top state for business” after a decade-long push to reform the tax code helped create “the nation’s strongest economy.”

The big story here is not the 2024 presidential primary. It’s that state-level elected officials, particularly governors, are thinking an acting as if they’re engaged in a national competition to achieve the greatest economic, educational and social welfare gains for their populations.

They’re pursuing not just results, but results that can be measured.

In that pursuit, they’ve learned that creating a climate conducive to economic growth produces the best results.

New Hampshire learned this decades ago. Our growth-based policies created the New Hampshire Advantage, which made us the economic marvel of New England.

Now that so many others have caught on, New Hampshire can’t afford to slack off. Being an island of liberty in the Northeast has dramatically improved our quality of life here. But the field of competition has expanded well beyond New England.

States all over the country are working every day to lure our young people and poach our businesses. If we stop pushing for competitive advantages by keeping taxes low, improving educational opportunities, budgeting more efficiently, and removing barriers to entrepreneurship and economic opportunity, we risk undoing the massive gains we’ve made since the middle of the last century.

It’s a mistake to view the Sununu and DeSantis inaugural addresses purely through the lens of the presidential primary.

These governors have become part of the presidential conversation because of their policy successes. And those successes are rooted in an older, ongoing competition among many states (often led by governors) to improve measurable outcomes for their residents.

That ongoing, and progressively more intense, competition is the bigger story.

The legend of Santa Claus is based on the actual St. Nicholas, and all tales of jolly old St. Nick share the same beginning. 

Nicholas, born in 280 AD, was orphaned when his parents died in an epidemic. He went to live with his uncle, a Christian bishop. Strong in his faith, the young Nicholas chose to devote his life to serving others. In pursuit of this mission he began giving away his family fortune.

Wait, his what?

Nicholas’ parents were, depending on the version of the story, either wealthy or at least very prosperous. When they died, the boy is said to have inherited quite a lot of money. 

Somehow, this detail often gets left out of the Santa story. Think of all the Christmas stories you’ve heard. How many times have they mentioned that Santa was rich?

Our tradition of hanging stockings at Christmas is rooted in the legend of St. Nicholas tossing three bags (or balls) of gold through the window of a poor man’s house to provide a dowry for each of the man’s three daughters. The gold is supposed to have landed in the girls’ shoes or their stockings that were hanging by the fireplace to dry. Nicholas perpetrated this good deed at night in obedience to Matthew 6:1, which warns against performing works of charity in front of others. 

Nicholas’ charity became the stuff of legend, and tales spread of a saint who gave money to the poor and helped children (even bringing some back to life through prayer). 

All of this was miraculous in the third century. Today, bringing people back to life through prayer is still miraculous. But people giving away enormous sums of money happens every day and we don’t consider it remarkable at all.

In the centuries since St. Nicholas tossed his inherited gold through the poor man’s window, economic growth has created millions of Santas. And we can create more. 

An obvious but overlooked lesson in the Santa Claus story is that the one necessary precondition for the existence of Santa Claus is wealth. 

Had Nicholas been poor, he’d have had no gold to give away. 

(Yes, Santa’s got a brand new bag, and it’s full of money.) 

When you think about it, having more than you need for survival is the foundation of all charity. And so the key to stimulating more charitable giving is to create more wealth. 

Research on charitable giving bears this out. When the economy grows, charitable giving increases. When it shrinks, charitable giving also shrinks.  

In 2021, Americans gave away $484.5 billion. And that’s just in official donations that can be tabulated. It’s doubtful that St. Nicholas could’ve comprehended a sum so large. 

But there’s another, even greater, benefit of economic growth. It reduces the need for charity in the first place. 

This chart of global hunger vs. GDP per capita shows how economic growth feeds the poor.

This chart of child mortality by level of prosperity shows how economic growth saves children’s lives. 

This chart of world GDP during the last two millennia shows the power of growth to lift people out of poverty.

Simply put, economic growth has created millions of Santas who give away billions of dollars a year. And the economy itself has become a sort of super Santa, enriching humanity and keeping children alive on a scale that St. Nicholas would envy. 

In “A Christmas Carol,” why isn’t Scrooge poor? Because a poor Scrooge could do nothing for Bob Cratchit and Tiny Tim. The spirits save Scrooge’s soul, but Scrooge’s wealth saves Tiny Tim’s life.

The stories of St. Nicholas and Scrooge both focus on their hearts. Their desire to help others is central to their transformation into folk heroes. But their charitable acts are made possible by their wealth.

The best way to spread Christmas cheer might well be singing loud for all to hear. But the best way to spread Christmas giving is to make everyone prosperous.

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.   

Newly elected lawmakers meet Wednesday to elect officers for the legislative session that starts in January. The House is divided 201-198, with one seat open, as the race ended in a tie. With such a narrow majority, leadership votes could get contentious quickly, and the opportunity for drama is higher than usual. 

How dramatic could things get? It turns out that we have some precedent to look to for answers. And we looked at it. And, well, the words “uh-oh” come to mind. 

Only once in New Hampshire history has the House of Representatives been more closely divided than it is for the 2023 session. That was in 1871, a time not renowned for its civility.

Just six years after the Civil War ended, New Hampshire elected a legislature evenly divided between Democrats and Republicans. The Senate consisted of six Democrats and six Republicans; the House sat 165 Democrats and 164 Republicans.  

When the House session opened on June 7, the stakes were not just high, they could hardly have been higher. Not only was House leadership up for grabs, but two Senate seats were unfilled, and filling them fell to the House. Oh, and the governor’s race that year also fell to the House. Control of the entire state government was on the line.  

That was the situation when members gathered in the morning to elect officers. Election of a speaker was the top order of business, and it was conducted without a fight. On the first ballot, Rep. William Gove of Weare was elected speaker 164-162. 

Rep. Gove was escorted to the chair by two members, whereupon he addressed the divided body as “gentlemen” and delivered a short and conciliatory speech. 

“It may not, perhaps, be amiss for me to express the hope that we shall approach the duties and responsibilities of this session with that careful deliberation and earnest forethought which are so necessary to wise and impartial legislation,” he said. 

And so the members of the House did proceed with careful deliberation and earnest forethought to deploy the diligently memorized rules, norms and customs of the people’s House in service of the most public-spirited effort to effect the destruction of their political opponents.  

The first order of business after choosing a speaker was to elect the House clerk and assistant clerk. This simple task took the next two days. In the process, names were struck from motions, the speaker was challenged, votes miraculously changed overnight, and members tried to pass resolutions to expel their colleagues.  

The initial motion to elect James Jackson of Littleton as clerk and James Colbath of Barnstead as assistant clerk was hit immediately with an amendment to scratch the names and “proceed by ballot to the choice of a Clerk.” The vote on the amendment was 160-159, so Speaker Gove had to cast his first vote to create a tie. The partisan maneuvering had begun. 

An attempt to replace the clerk slate with two other names was killed 161-162, and it was followed by a motion to adjourn, which also failed, followed by a motion to table, which also failed. Then a member questioned the legality of the original motion, asserting that a special rule was needed.

Speaker Gove ruled that a special rule was not needed. In the ensuing series of votes, a motion to uphold his ruling failed 162-164. This was quickly followed by a vote to adjourn, which passed.

When Day 2 of the session opened at 10 a.m. on Thursday and a prayer was said, a member moved to draw seats, and another member moved to declare the drawing of seats null and void. Things went downhill from there.

A motion to adjourn until the next day was defeated, followed by a motion to lay the drawing of seats on the table, which was also defeated. Unable or unwilling to get anything else done, the House then adjourned until 3 p.m.

Upon returning, representatives drew their seats, then sustained the speaker’s ruling from the previous day. How? The majority claimed to have discovered overnight that the previous day’s 162-164 vote against the speaker’s ruling was in fact a 162-154 vote to sustain the speaker’s ruling. 

The question was then moved to vote by ballot on the clerk and assistant clerk. The speaker ruled the motion out of order and refused to hear an appeal. A member from Somersworth asked to be excused from the voting but the speaker would not excuse him. A vote on whether to put the main question (of electing a clerk) was moved, and the vote was 163-163. The speaker broke the tie. 

Then the gloves came off.

A member rose to offer a resolution to expel another member from the House on the grounds that he hadn’t lived in the state for at least two years, as required by the state constitution. The speaker ruled the resolution out of order. A motion to adjourn was made, but failed to pass. 

Finally, the first half of the original motion, to elect Jackson as clerk, was brought to the floor and passed 164-162. A motion to adjourn was offered, ruled out of order, and the vote for Colbath as assistant speaker followed and was passed 163-162. The House adjourned, having accomplished the election of its three key officers over two days.

The representatives had obviously ignored Speaker Gove’s request in his acceptance speech that members conduct their business “with as little consumption of time as is consistent with due diligence and careful consideration.”

On Friday, June 9, the House reconvened, and members from both sides began bombarding the speaker with resolutions to expel other members for not being qualified to serve. A member from Milford was called to order for violating House rules by stating that Democrats had behaved poorly in former years and he was “going to give them some of their own medicine.”

On Saturday, members elected two senators and Democrat James Weston of Manchester (namesake of Weston Observatory, and pictured above) as governor.

With a one-seat House majority, Democrats managed to get their governor and a Democratic president of the evenly divided Senate. The hard-fought victories lasted only for that session, though.

The next year, voters elected a Republican governor, an 8-4 Republican Senate, and a 210-150 Republican House. Which could be a good reminder that, in politics, victories — and losses — are not always as high-stakes as they often feel.

(Editor’s note: The House records from back then are not as orderly as they are today. If any reader finds a minor error in the narrative of these votes, please let us know and we’d be happy to correct it.)

By Kerry McDonald

Parents in the Granite State and across the country are clamoring for more educational choices, and greater access to those choices, so that they can find the learning environment that is the best fit for their child’s distinct needs and interests. As a longtime New Hampshire homeschooling mom, Kathryn Michelotti has seen the statewide growth of both homeschooling and other, more personalized education options over the past decade. Recognizing this mounting demand, Michelotti and fellow homeschooling mom Sharon Osborne opened Latitude Learning, a homeschool learning center, in Manchester in 2019.

Latitude Learning began as a small learning collaborative with a la carte classes and activities for local homeschoolers, but in the wake of widespread pandemic school closures and remote learning in 2020, Latitude rapidly expanded. The program quickly outgrew its small space and moved to a larger facility in Derry, where Latitude now serves 120 students, ages four to 17, by offering daily classes and clubs.

Seeing the success of Latitude Learning and the continued parent desire for more learning options in New Hampshire, Michelotti and Osborne are planning to scale their program statewide. “We hope to have a few more Latitudes around New Hampshire so more learners can thrive the way our students do,” Michelotti said. “I’d love to see a future where each child is involved in a learning center or school that reaches them, instructs in their individual learning style, and encourages them to develop their strengths and talents while supporting their individuality and promoting personal responsibility.”

This vision recently led Latitude Learning to be recognized as a quarter-finalist for the prestigious Yass Prize that rewards education entrepreneurs across the U.S. who are building innovative learning models. As an acknowledgement of their efforts, and to help further their expansion goals, Latitude Learning won a $100,000 grant this fall from the Yass Foundation.

“To be recognized and even awarded for what we are doing shows that others see we are on the right path,” Michelotti said. “Of course, we already knew this because we can see how happy our students are, but an outside organization like the Yass Foundation for Education’s acknowledgement of our mission is incredibly validating.”

New Hampshire is a national leader in both school choice programs and education entrepreneurship, helping to increase learning options for families. The state’s tax-credit scholarship program and new Education Freedom Accounts (EFA) enable income-eligible families to exit an assigned district school for a private education option that may work better for their child.

Meanwhile, entrepreneurial parents and educators, such as Michelotti and Osborne, are building new learning models and launching new educational programs that broaden the supply of available options. Most of these new educational programs are low-cost, but many of them also participate in the scholarship and EFA programs, enabling greater access.

Latitude Learning, for example, charges $600 for a 16-week semester of one-day-per-week classes, which is less than $40 per day. Families can choose how many days per week to attend. Latitude is also an approved provider for both the New Hampshire EFA program and the tax-credit scholarship program, making it more widely accessible to more families.

Encouraging the proliferation of low-cost, innovative education solutions throughout New Hampshire will enable more families to find and access just the right learning environment for their child. Unfortunately, regulatory hurdles and related bureaucratic barriers can make it difficult for education entrepreneurs to start and scale their small businesses.

For Becky Owens in Chester, trying to offer sporadic homeschool programs on her farm property turned into a regulatory headache that likely would have deterred many other aspiring education entrepreneurs from moving forward. Owens had been homeschooling her own five children for several years, after pulling her oldest son from the local public elementary school because it wasn’t a good fit for her shy, sensitive boy. She wanted a more personalized educational environment for him and her other children that would be responsive to their individual learning needs and styles.

A college professor for 15 years with a Ph.D. in education, Owens decided to create that personalized learning environment, and eventually expand her offerings to other children in her community. In 2020, she decided to host occasional nature hikes on her property for small groups of local homeschoolers. She had a handful of students register for one of her hikes, and she placed a chalkboard sign in front of her house with the words “Farm Rich Nature Hike” so families could find her.

This simple gesture set off a cascade of events involving the local building inspector, who issued her a “cease and desist” letter for her farm walks. Over the subsequent weeks, Owens had to prepare numerous documents for local officials, including an aerial view of her property, and appear before the planning board to ask for permission to operate as a home-based business. She also had a property inspection from the local fire chief, even though her program was held entirely outside. All of this was required just so Owens could welcome a few children to her property for a nature walk. Her walks never exceeded 10 kids.

Eventually, Owens received approval to operate as a home-based business. “As long as I was completely outside, with no more than four cars at a time, and the kids were not being dropped off on the street, then I could continue,” said Owens, who was granted permission to run a home-based residential business but was told any growth would be limited.

“I can’t hire staff because the building inspector said I can’t. If I hire just one person, I am no longer considered a home-based business,” she said.

Owens offers periodic nature hikes, as well as a program called “Pony Pals,” that provides horse-themed interdisciplinary academic work for children once a week for two hours at a time. Additionally, she offers a once a week program for foster kids that focuses on life skills. (Owens and her husband are also foster parents.) Per her home-based business approval, all of these programs are completely outdoors.

In 2021, however, Owens discovered that the fast-growing national microschool network, Prenda, was entering New Hampshire, and that the state was using a portion of its federal COVID relief funds to make Prenda learning pods available tuition-free for New Hampshire families. Owens gravitated to Prenda, appreciating its small, mixed-age model and focus on individualized learning. She signed up as a recognized Prenda guide, able to host these learning pods at her home.

Today, Owens leads two Prenda pods on alternating days and times throughout the week, each with a maximum of 10 children in kindergarten through sixth grade. A few hundred New Hampshire children are enrolled in Prenda pods throughout the state.

As a hired guide for a national microschool network, Owens is able to operate her indoor learning pod program out of her home, but she is barred from running a similar, independent microschool program on her property.

This discrepancy, triggered by local ordinances that often prohibit the creation and expansion of home-based businesses—and especially of education-related businesses—can block home-grown educational solutions in New Hampshire. It can dissuade entrepreneurial educators and parents from offering educational programming that nearby families may want, and it can tilt the scale away from local, entrepreneurial offerings.

“Something needs to be done,” Owens said. “These local roadblocks need to go away.”

Cultivating a low-tax, low-regulation landscape in New Hampshire that encourages small business has long been a priority for Granite State voters. The emergence of a new sector of education entrepreneurship, catalyzed in large part by the state’s growing school choice programs and increasing parent demand for new and different learning options, could be encouraged and accelerated by exempting non-traditional educational offerings from outdated and often irrelevant regulations. Home education is already exempted from state statutes that define education as occurring in “schools.” But today there are many more educational programs in New Hampshire and across the U.S. that don’t fit into the category of “school” or “homeschool,” and often run into regulatory snares as a result.

Providing broad regulatory exemptions for all non-traditional educational organizations in New Hampshire would encourage education innovation and experimentation. Devising this education-focused “regulatory sandbox” could help unleash the supply of more education options for families by prompting entrepreneurial parents and educators to build new and varied learning organizations.

Additionally, modifying local zoning ordinances to allow educational services by default in residential and commercial zones would enable more learning pods, microschools, and similar non-traditional educational models to emerge.

These common regulatory barriers to entry and scale impact education entrepreneurs nationwide, as my new report for State Policy Network describes. They preclude creative education solutions from being invented and extended, and limit the assortment of education options available to families. New Hampshire is well-positioned to lessen the regulatory burden on education entrepreneurs, and encourage the introduction of an array of educational possibilities. Parent demand for more education options continues to grow, and school choice policies such as EFAs and tax-credit scholarships continue to support that demand.

Now, state and local policymakers can encourage the supply of these diverse learning options by removing regulatory hurdles that prevent or limit education entrepreneurship throughout New Hampshire. Who knows what New Hampshire’s next award-winning learning model will be?

Kerry McDonald is an education policy fellow at State Policy Network and a senior education fellow at the Foundation for Economic Education. She is the author of the book, Unschooled: Raising Curious, Well-Educated Children Outside the Conventional Classroom.

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.

One of the more important New Hampshire stories of the 2022 mid-term elections happened in Massachusetts, where voters approved a so-called “millionaires tax.” That vote represents a pivot back toward the old “Taxachusetts” days when Bay State lawmakers disregarded the interstate competitive effects of their tax policies.

When it takes effect, the “millionaires tax” will levy a punitive 4% tax rate on incomes of $1 million or more. That is on top of the state’s existing 5% income tax. This 80% tax increase for people who earn $1 million or more is likely to motivate a lot of people to seek shelter in places that don’t treat them as cash cows to be milked for the benefit of others.

Massachusetts abuts just one state that does not view people as resources to be exploited. That would be the live-free-or-die state. Accordingly, New Hampshire’s population of millionaires — and people who aspire to that status — should increase a bit in the near future.

The Center for State Policy Analysis at Tufts University estimated that the new tax will raise $1.3 billion next year for the People’s Republic of Massachusetts. That figure would be $2.1 billion, the center estimates, but tax avoidance strategies, including cross-border migration by high-income individuals, will cut the expected revenue by $800 million. 

“Together, cross-border moves and tax avoidance would reduce millionaires tax revenue by roughly 35 percent,” the center concluded.

The $1.3 billion figure represents about 2.5% of the Massachusetts state budget. Advocates argued that the state needed this additional money, even though revenues were so high in the last fiscal year that the state was required by law to return $2.94 billion of state surplus to taxpayers.

This was a revenue grab, not a necessary tax increase. Legislators (who initiated the proposal) wanted more money, but didn’t want to raise general taxes, so they singled out an unpopular minority for excessive taxation. 

Massachusetts residents who expect this revenue to go to roads and schools might be disappointed. The money goes into the general fund, not specifically to those causes. The Boston Globe observed that the narrower-than-expected margin of victory indicates a suspicion among voters that legislators will squander the money. 

“That the measure passed by such a narrow margin — about 52 percent to 48 percent — says more about voters’ mistrust of the Legislature to actually follow through on spending those tax dollars wisely than it does their concern for the state’s wealthier citizens,” The Globe wrote in an editorial after the vote. 

That’s not the only cause for concern. Massachusetts now has a graduated, not a flat, income tax. That creates precedent — and an invitation — for the introduction of other rates above 5%. 

It also represents a shift away from Massachusetts’ efforts to shed its “Taxachusetts” reputation and make itself more economically competitive in the Northeast. If it continues to move in this direction, New Hampshire could enjoy some of the spillover effects, in the form of fleeing investors, entrepreneurs and capital. 

A federal government agency worked in the winter of 2019 to prevent New England from accessing adequate supplies of natural gas, emails recently obtained by the Cato Institute show. 

Government is supposed to work on behalf of citizens, not special interests. But the U.S. Maritime Administration (MARAD), a subdivision of the U.S. Department of Transportation, has been working in coordination with the U.S. shipbuilding industry to prevent New England from importing domestic natural gas when supplies run short in the winter. 

Why? To protect U.S. shipbuilders from foreign competition.

The Jones Act, a century-old federal law, requires that ships transporting goods between two U.S. ports use ships built in America, crewed by Americans and owned by American companies. That’s a problem for New England because no liquid natural gas tankers are in compliance with the Jones Act. 

With no LNG tankers capable of legally bringing natural gas from Texas or Pennsylvania to Boston, New England governors have spent years pressing for waivers from this protectionist law. After the extremely cold winter of 2017-18, that effort was redoubled. But it was crushed with the help of MARAD, a move that put the entire region at risk of blackouts during periods of peak demand.

Through years’ worth of Freedom of Information Act (FOIA) requests, Cato Institute researchers recently exposed how MARAD lobbied to block the importation of domestic natural gas into New England even when the region’s supply constraints put lives at risk.

Cato scholar Colin Grabow laid out the sordid, outrageous story, which we summarize with permission here.

The background: In early 2016 the United States began large‐ scale exports of LNG following the opening of an export facility in Sabine Pass, Louisiana. As export levels increased, observers began to point out the Jones Act’s role in preventing this LNG from reaching U.S. consumers. In March 2018, for example, the Texas Railroad Commissioner sent an open letter to Congress noting the Northeast’s importation of gas from Russia instead of Texas because of the Jones Act. In August of that year, a group of New England governors floated the possibility of Jones Act modifications to help meet regional energy needs while that December Massachusetts released a comprehensive energy plan that repeatedly cited the Jones Act as an obstacle to obtaining domestic LNG.

In 2019, as New England elected officials pressed Washington for a Jones Act waiver, a senior MARAD official began lobbying others in the U.S. government, including the secretaries of energy and transportation, to oppose a waiver. MARAD also tried to stop Massachusetts’ waiver request, in part by giving the state false information about the status of its waiver request and one from Puerto Rico. 

This is not speculation. Cato got the emails, which show MARAD officials collaborating with shipping industry leaders on messaging in the agency’s effort to block Jones Act Waivers for New England.

These emails come from January of 2019, just a year after New England came within two days of rolling blackouts because of a shortage of natural gas, according to ISO New England, the region’s power grid operator. The winter of 2017-18 was so cold that Massachusetts power generators burned through twice as much oil in two weeks as they did in all of 2016.

The CEO of ISO New England testified to the U.S. Senate Committee on Energy and Natural Resources in January of 2018 that New England’s access to natural gas was dangerously constrained.

“Bitter cold temperatures drove an increase in demand for natural gas, Gordon Van Welie said in his testimony. “However,  we’ve known for several years that when it gets cold New England does not have sufficient natural gas supply infrastructure to meet demand for both home heating and power generation. Constrained pipelines resulted in substantially higher natural gas prices which led to much older and less efficient oil- and coal-fired power plants running ‘in merit.'” 

It was no secret in Washington that New England was one long cold snap away from rolling blackouts. 

Yet MARAD officials, in coordination with U.S. shipbuilding interests, succeeded in squashing the region’s effort to get an exemption from the Jones Act. This amounted to a federal agency putting the financial interests of one industry ahead of the health and safety of an entire region of the country.

With ISO New England and the Federal Energy Regulatory Commission again warning about the possibility of rolling blackouts if we experience another prolonged cold snap, there are renewed calls for a Jones Act waiver for New England. U.S. Rep. Chris Pappas has said he favors a waiver. (He said this on my radio show last week.)

Will New Englanders win this time? That depends not just on the political influence of shipbuilders and their unions, but on the influence of a federal agency that has aligned with them and against consumers. Needless to say, that’s not how government is supposed to work. It’s how government too often works under the corrupting influence of protectionist laws.