Anyone interested in eliminating income taxes eventually finds their way to a Maine/New Hampshire comparison, as a writer for Forbes magazine did Friday.
In a column on the magazine’s website, Travis Brown wrote, “Maine doesn’t attract the level of derision that extremely high-tax states (like New York) do.”
That surprised us after all of the efforts our governor has made to publicize our high taxes.
Still, Brown said, our economy is not growing.
Where or where would we look for an answer?
Massachusetts might be a good place to start. Based on per capita income, it’s the third richest state in the country.
Massachusetts has good public schools, some of the best universities in the country, a large financial and technology sector, research institutions and high outcomes across the board.
If different tax systems make all the difference, perhaps we should mimic the Bay State’s combined system of property, sales and incomes taxes.
Oh, wait, we already do that.
But, as you have probably guessed by now, Travis Brown wasn’t interested in comparing us to the most successful state in New England.
Maine and New Hampshire have similar populations, he said, so let’s go there.
What we find is that New Hampshire’s economy has grown over the last 10 years, while ours has struggled in the transition between a manufacturing and a service/technology economy.
And what’s the critical difference between the two states? Maine has an income tax and New Hampshire does not, Brown wrote.
He then lauded Gov. Paul LePage’s plan to eliminate the income tax (and about half of state government revenue) in his next term.
While Maine and New Hampshire are neighbors, there are some other significant reasons income and economic growth are better in New Hampshire than Maine.
The chief reason for the disparity is proximity.
New Hampshire is like a leech attached to the back of a very large economic animal, Boston.
If you look at a few maps and tables this becomes abundantly clear.
In the four Massachusetts counties surrounding Boston, the average per capita income is $37,417. In the two Metro West counties, per capita income is $40,139 in Middlesex County and $42,371 in Norfolk.
And this despite the state’s income tax.
Slip just across the border into New Hampshire, where there is no income tax, and per capita income slips a bit to $37,420 in Rockingham County and $33,653 in Hillsborough County, which surrounds Nashua.
Brentwood and Manchester are about an hour outside of Boston, while Nashua is 45 minutes away. Hospitals, businesses and colleges surrounding Boston are an even shorter commute.
Here’s what the writer for Forbes magazines did not consider:
There are 83,976 commuters in Rockingham County and 44,774 of them commute to another state, meaning, basically, Massachusetts. In adjoining Hillsborough County, 36,912 workers commute across the state line.
And here’s the kicker: They must all pay Massachusetts income taxes through their employer.
So, those people may be well-paid, but they are also enjoying, at least tax wise, the worst of both worlds: an income tax in Massachusetts and high property taxes in New Hampshire.
Why would people relocate from Boston to New Hampshire. Small town life? Lower housing prices? Access to the outdoors?
The proof of the pudding is that per capita income rapidly recedes the farther a new hamster moves from the state line until you hit Coos County, where per capita income is $23,580, which happens to be $3,119 less than the per capita income in Maine.
Now, despite our income tax, per capita income in Cumberland County is still a respectable $31,041, higher than all but three of New Hampshire’s wealthiest counties.
Portland, of course, is Maine’s version of an economic engine. Cumberland and York counties account for more than half of Maine’s economic output.
And guess what? They are the closest counties we have to Boston. How is it that more than half the state’s economic output and 40 percent of the state’s population is crammed into the two southern-most counties?
Coincidence, you think?
Meanwhile, just as in New Hampshire, per capita income generally slides the farther a Mainer gets from Portland and, by extension, Boston.
By the time one gets into Piscataquis County it’s $19,870 and in Washington County it’s $19,404, the lowest in Maine.
But this isn’t unusual. Virginia and Maryland owe their high incomes to Washington, D.C. (and U.S. taxpayers), while Connecticut and New Jersey owe theirs to New York City.
Per capita income in Bloomfield Hills is $105,000 and in Grosse Point Shores it’s $98,000 — two communities just outside the recently bankrupt city of Detroit.
Per capita income is 27th in Maine compared to other states. That’s mediocre, and we should not be satisfied with that.
But remember, in 23 other states, incomes are even lower.
Yes, we have shortcomings in Maine. But wouldn’t it also be good to look at what we’re doing right — then tell the world about that?
rrhoades@sunjournal.com
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