The Great Tax Divide: New Hampshire’s Retail Oasis vs. Maine’s Retail Desert

The New Hampshire Center for Economic Policy (NHCEP) has some good economic news about important state policies that have worked extremely well for the people of New Hampshire.

“Every state in America is competing with 49 other states for resources, businesses and the jobs they create,” notes NHCEP president J. Scott Moody.  “This new research details some of the policy decisions that make New Hampshire one of the best places in America to run a business.  Our retail and service sectors have the added advantage of being surrounded by states known for high taxes, which emphasize New Hampshire’s sound policies.  For the purposes of this report, we make a state-to-state comparison with Maine, which has a similar population working with dissimilar tax policies.”

“Beyond the results of this study, it is energizing and exciting to be an economist in 2011 with some good news!” adds Chief Economist Wendy Warcholik.  “It’s also very timely too, as the New Hampshire Legislature is considering a reduction to the Cigarette Tax of a dime per pack.  We agree that this tax roll-back will actually increase state revenues and, more importantly, offer stronger incentives for Cross-Border Shoppers to choose New Hampshire.”

“Maine shoppers travel to New Hampshire businesses to such a high degree, that retail locations are few and far between on their side of the border,” Mr. Moody continued.  “Whether it’s for cigarettes or chainsaws or big screen TV sets, New Hampshire businesses are winning the competition for shoppers’ dollars – and also experiencing a less severe recession thanks to the pro-growth state policies that have been in place for decades.”

Mr. Moody concluded: “This new research gives us the rare chance of pointing out some good economic news for New Hampshire in the middle of a recession.  The take-away from this research is that it proves the wisdom of New Hampshire’s low-tax, pro-business policies which jump-start businesses in good times; and reduce the negative economic impact during bad times.”

Read this new report, with Good Economic News for New Hampshire here:  http://nheconomics.org/wp-content/uploads/2010/08/NHCEP-Liberty-in-Economics-Volume-1-Issue-3-The-Great-Tax-Divide-041311.pdf

Mr. J. Scott Moody and Dr. Wendy Warcholik are available for press interviews, on-air appearances and in-person presentations of this research.  If you have any questions or would like to arrange a meeting, please contact Martin Sheehan, the Director of Communications via e-mail at martinsheehan@nheconomics.org or by calling 207-650-7335.

 

Per Capita versus Per Household Personal Income II

This is the follow-up blog to my previous post on Per Capita versus Per Household Personal Income to illustrate how per household income is a better metric than per capita income when comparing states.  As shown in the first chart, there has been a significant decline in average household size of 35 percent to 2.7 people from 4.13 people in the United States.

Maine and New Hampshire have mirrored the overall trend, but to varying degrees.  Maine’s household size was generally larger than the national average and New Hampshire from 1929 to the 1970s.  By the late 1970s/early 1980s, Maine’s household size had fallen below the national average and below New Hampshire.  After the 1980s, New Hampshire’s household size stabilized just below the national average while Maine’s continued to slide lower.

The next two charts then compares the growth in real, per capita income with that of real, per household income for both Maine and New Hampshire.  With the two charts next to each other, it is easy to see that a larger gap begins to develop in per household income, relative to per capita income, between Maine in New Hampshire beginning in the 1980s–the same time that New Hampshire’s household size overtook Maine’s.

Overall, Maine’s relative economic performance relative to New Hampshire has been boosted, in the short-term, by a falling household size.  However, when adjusting for this effect Maine’s economic performance worsens substantially.  On per capita terms, New Hampshire’s income is 17 percent higher than Maine’s in 2009; while on per household terms it is 26 percent higher.

I will post another blog in the next few days showing how this relationship changes among all 50 states.

Note: The historical data from the Census Bureau on households was only available every ten years during the decennial census.  Intervening years were interpolated.  Since 2000, household size has been reported on a more frequent basis under the new American Community Survey (ACS).  However, for technical reasons, this analysis only uses the 2009 ACS data with the intervening years being interpolated.  This will be replaced by data from the 2010 decennial census when it becomes available.

New Hampshire’s Personal Current Transfer Receipts

Between 2008 and 2009, New Hampshire’s Personal Current Transfer Receipts (PCTR), which consists of Social Security, Medicare, Medicaid, etc., grew by $927 million to $8.3 billion from $7.4 Billion.  As shown in the first chart below, over the last ten years, PCTR has nearly doubled from $4.2 billion in 2000.

Overall, growth in New Hampshire’s PCTR is in-line with the national average.  The one area that is higher than the national average is in Medicare at 144 percent over the last ten years versus the national average of 128 percent.  Fortunately, New Hampshire has kept a lid on Medicaid spending growing at 63 percent over the last ten years versus the national average of 87 percent.

In contrast, Maine’s Medicaid spending has soared 115 percent.  At the end of the day, that makes a big difference to the state’s bottom line.  Maine state government, in 2009, spent twice as much on Medicaid than New Hampshire–$2.6 billion versus $1.4 billion.

To see what’s going on nationally, see here.