Resist distortion of NH biz image

Every two years, when it comes time to mount a political campaign in New Hampshire, it’s not unusual for candidates for state office to tout the need to attract new businesses to the state – and rightly so.

Such policies are critical to the fiscal health of any state, but they are particularly important in New Hampshire, which relies heavily on business taxes to fund state government in the absence of a broad-based sales or income tax.

What tends to happen, then, is the rhetoric gets so hot, you can’t blame voters for wondering whether they live in the least business-friendly state in the nation.

That’s pretty much what happened two years ago, when Republican nominee John Stephen spent a good part of the campaign lambasting Gov. John Lynch for presiding over a state that sports “the highest business tax rate in the nation.”

So before anyone jumps to any conclusions this time around, consider this: a new survey has found that New Hampshire, quite to the contrary, is among the most business-friendly states in the country.

Last month, a nationwide survey of 6,000 small-
business owners ranked New Hampshire No. 8, making it the only New England state to crack the top 10.

The survey was conducted by the professional services firm and the Ewing Marion Kauffman Foundation, which bills itself as the world’s largest foundation devoted to entrepreneurship.

Survey respondents were asked to assess how easy it is to open a business in their state, what kind of support they received and whether they would recommend starting a business there to other entrepreneurs.

Overall, Idaho, Oklahoma, Texas and Utah topped the field with “A+” grades, while New Hampshire earned an “A” along with Georgia, Louisiana and Virginia. California, Hawaii, Rhode Island and Vermont each received an “F.”

Survey respondents were asked to assess their state in 15 categories, such as the ease in starting a new business and the friendliness of regulations covering health and safety; employment, labor and hiring; licensing; environmental; and zoning.

Specifically, New Hampshire got “A” or “B” grades in the subcategories of overall friendliness, ease of starting a business, regulations, employment, tax code, licensing, environment and networking programs. The lowest grade – a “D” – was for the cost of hiring a new employee.

While it would be a mistake to draw too many conclusions from a single survey, it is worth noting that it pretty much mirrors the Tax Foundation’s annual “2012 State Business Tax Climate Index.”

While acknowledging the state’s low ranking in corporate taxes (No. 46) and property taxes (No. 41), the Washington-based foundation still ranked New Hampshire among the best states in the nation at No. 6, behind Wyoming, South Dakota, Nevada, Alaska and Florida – other states with no income tax, sales tax or both.

“The lesson is simple: a state that raises sufficient revenue without one of the major taxes will, all things being equal, have an advantage over those states that levy every tax in the state tax collector’s arsenal,” economist Mark Robyn wrote in this year’s report.

So, by all means, let’s have a spirited debate this election season over whether our government leaders are doing enough to attract and keep businesses – that is certainly a legitimate campaign issue.

But let’s guard against those candidates who would distort the state’s business-friendly reputation for sheer political expediency.