Advocates propose statewide income tax to lessen property taxes, sparking firestorm

A proposal to address high property taxes by introducing a statewide income tax and property tax roiled Concord Tuesday, prompting denunciations by both Republican and Democratic political leaders. But proponents are asking the public to give the idea a chance.

The idea, titled the “3-3 Tax Savings Plan,” would institute a 3% income tax for all residents and a $3 tax per $1,000 of equalized property value for all homeowners. 

The purpose of the proposal, advocates said Tuesday, would be to raise $2 billion a year for the state’s Education Trust Fund, allowing the state to pay $10,000 in base adequacy payments per student — up from the current $4,266 per student — and $25,000 per student receiving special education services — up from the current $2,185. That influx in payments would allow cities and towns to dramatically reduce their local property taxes, proponents argue.

Under the proposal, the taxes would include a number of reductions. Individuals could exempt the first $35,000 of their income, plus an additional $15,000 deduction for each dependent and another $15,000 if that person were single but had dependents. After the income tax is calculated, renters would receive an additional $750 off. And the property tax would not apply to the first $250,000 of property value. 

The bill’s supporters say those exemptions would ensure that low-income families would not be affected by the new taxes and could see their current property taxes lowered or eliminated. Proponents have touted a website, nhtaxsavingscalculator.com, that allows residents to estimate their bill under the proposed tax plan. 

“The idea behind the program is to spread the cost of education more widely and more fairly than we currently do, to make schools and housing more affordable,” said Andru Volinsky, a former New Hampshire executive councilor and gubernatorial candidate.

The “3-3” proposal does not include legislation and there is no plan to introduce it as an amendment to an existing bill this session, Rep. Thomas Oppel, a Canaan Democrat who supports the idea, said Tuesday. 

Instead, Oppel said, the plan is meant to provoke a conversation. The proposal seeks to challenge a 50-year-old fixture of New Hampshire politics known as “the pledge,” in which candidates for state office promise never to support the creation of a broad-based sales or income tax. New Hampshire is one of eight states with no income tax.

Oppel says the political impetus behind the pledge has changed. Today, New Hampshire residents are more concerned with climbing local property taxes than with the lack of a broad-based tax, he argued. He said the 3-3 plan is meant to rebalance the state’s reliance on local property taxes to pay for schools and put a greater onus on wealthier residents. 

“Every voter that I talked to, I would tell them I supported public education, I supported housing, I supported better health care,” Oppel said, referring to the 2024 election. “And the response from every single one of them was, ‘How are you going to pay for it?’”

He added: “… We’re going to make this case that this is an opportunity to cut your damn property taxes and have a fairer system in making the people with the least lower their burden, and the people with the most … pay their fair share.”

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Rochester Mayor Chuck Grassie echoed that point, and said a statewide income and property tax that was targeted at higher-income residents could allow his city to access state funds to pay for services, rather than increasing property taxes for all residents. 

Other state Democrats speaking in favor of the plan Tuesday morning included Mark Fernald, a former Democratic state senator and gubernatorial candidate; Keene City Councilor Robert Williams; and Concord City Councilor Aislinn Kalob. 

But the proposal quickly drew political opposition. Gov. Kelly Ayotte, House Speaker Sherman Packard, and Senate President Sharon Carson all issued strong condemnations of the prospect of an income tax, arguing it would deter newcomers to the state. 

“No income tax, no sales tax. Not now, not EVER,” wrote Ayotte in a post on X, alluding to her February State of the State address. 

“They claim they want to ‘put more money in people’s pockets,’ but what they really mean is their own,” Carson said in her own statement. “We don’t have to look far to know that higher taxes don’t help working families get ahead — they drive them out the door.”

Meanwhile, both Senate Minority Leader Rebecca Perkins Kwoka and House Democratic Leader Alexis Simpson said they opposed the idea, seeking to distance the mainstream Democratic Party.

“When Volinsky ran for governor on an income tax five years ago, he lost the Dem primary,” wrote Simpson in a post on X. “If he wants to try again, that’s his choice, but House Democrats do not support an income tax.”

Critics of the proposal argued the solution to property taxes is to cut spending, pointing to data by the Josiah Bartlett Center for Public Policy showing that inflation-adjusted spending in New Hampshire public schools rose by 45% from 2001 to 2024, even as the number of students enrolled in the schools dropped by 26% over the same time period.

They also said the new revenue would not necessarily lead to reductions in local property taxes, and warned that even if it did so in the short term, state and local representatives might be tempted to gradually increase taxes in the long term, potentially resulting in more taxes over time.

Oppel said those concerns are misleading. The proposed tax plan, he argued, is not meant to increase state spending, but to change how the money is raised. 

“The real issue is not about raising or cutting,” he said. “The real issue is who’s paying the taxes. And, frankly, who’s not.”