Cut to NH Insurance Tax would create thousands of jobs at minimal cost to state budget

NEWS from The Josiah Bartlett Center for Public Policy

7 South State Street Concord, NH 03301 603/224-4450 Fax 603/224-4329 jbartlett@jbartlett.org

Contact: Charlie Arlinghaus

Concord, NH - The Josiah Bartlett Center for Public Policy issued a report today showing a cut to the state insurance tax would create thousands of jobs and hundreds of millions of dollars to the state economy while costing the state about $4 million is lost revenue.

According to Bartlett Center president Charlie Arlinghaus, “a 1 percentage point cut to the little-known insurance tax will jumpstart the economy and make New Hampshire a regional center for well-paying financial services jobs. The cut would add between 2700 and 3400 jobs with an economic impact of $100 - $125 million. Just as important, because of the structure of insurance taxes and their reciprocal provisions between states, New Hampshire can create this extraordinary economic incentive while reducing the increase in state revenues by merely $4 million.”

“As the economy changes, New Hampshire must position itself to have a competitive advantage in growing economic sectors that will create opportunity for our workers and strength for our economy. Instead of continuing losses of high paying insurance jobs, NH can create an incentive for companies to create jobs in our state.”

According the The Bartlett Center’s report, the tax’s unique structure creates an opportunity. Insurance companies pay taxes to each state they write policies in based not just on that state’s tax rate but also on the home state’s tax rate through reciprocal or retaliatory provisions. Companies have an incentive to locate in a low tax state because it will save them money in dozens of other states through the reciprocal provisions.

Arlinghaus added, “this could be the most pro-job growth change to our state’s tax system since the business profits tax created the modern New Hampshire economy 35 years ago. Just like 35 years ago, the reason to make this change is to move New Hampshire forward and make us a leader in the new economy.”

The Josiah Bartlett Center for Public Policy is a non-profit, non-partisan, independent think tank focused on state and local public policy issues that affect the quality of life for New Hampshire's citizens. The Center has as its core beliefs individual freedom and responsibility, limited and accountable government, and an appreciation of the role of the free enterprise system. The Center seeks to promote policy that supports these beliefs by providing information, research and analysis. See www.jbartlett.org