"Your scheme yields no revenue. It yields nothing but discontent, disorder, and disobedience." — Edmund Burke, 1774, to the British Parliament

The last two columns in this space discussed the Claremont law suits and the resulting decisions by the New Hampshire Supreme Court. In this column we will discuss the predominant tax that resulted from those decisions, the statewide property tax (SWPT).

In previous columns I discussed why the legislature eschewed both a state sales tax and a state income tax. For those who would have preferred those taxes, you should know that we will disagree. I have been adamantly opposed to both of those choices. 

But that certainly doesn’t make me a fan of the SWPT. It is a terrible tax for three reasons. (1) It is a sham tax which transformed the former local property tax into a state tax. (2) As a result of that transformation, it was required by the state constitution to be proportional throughout the state, which (3) created "donor" and "receiver" towns which has balkanized this state, pitting one town against another.

How much money is raised for distribution by the SWPT? Much less than one might think. In Fiscal Year 2002 which started July 1st, the gross state education package is $881M. Of that total, the SWPT raises $483M and the remaining $398M is raised by "other" taxes.

It looks like the SWPT raises more than half the total. On paper, yes. But there’s more to it. Of the $483M SWPT, $454M stays right in the town where it is raised. That’s the SHAM part. That’s what we used to call "local property tax". Only $29M of that huge amount is distributed to other towns. That’s the transfer from "donor" towns to "receiver" towns.

Why are there "donor" towns? The constitution requires that a state tax be "proportional". It must be the same throughout the state. The court does not allow the legislature to target the money, requiring instead that a set dollar amount be sent per pupil to each school district. Thus towns with high property values may raise more money than their number of students requires. They then become a "donor" town. The reverse results in becoming a "receiver" town. 

$29M is the total amount sent from "donor" towns to "receiver" towns. When that is added to the $398M raised by "other" taxes, we see that a total of $427M is actually distributed. Is the conflict that has developed between towns in this state been worth the resulting $29M in "aid"?

I submit that it is not. Besides, if the court would allow the legislature to target aid where it is needed (like Sutton and Warner) rather than sending it per pupil to towns that do not need it (like wealthy towns such as Amherst and Bedford), we wouldn’t even need the $29M from "donor" towns (like New London and Newbury). 

What can be done? For the answer to that, you will have to see next week’s column where I discuss a plan to get the New Hampshire Supreme Court out of the legislative process and repeal the SWPT.