Jennifer Weiner at the Federal Reserve Bank of Boston recently set out to answer how New Hampshire avoids a broad-based sales and income tax. To answer the question, Weiner examined the factors that contribute to New Hampshire’s lower-than-average spending and major revenue sources. But as the study shows, there is no simple answer.
New Hampshire spends less than other New England states in most areas, but there is a complex set of policy choices and circumstances (e.g., socio-economic, demographic, and geographic characteristics) that drive its spending.
On the revenue side, New Hampshire partially makes up for the lack of sales and income taxes with higher per capita property taxes and a unique business tax structure. But no single source accounts for more than 20% of its general and education fund revenues.
