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A new publication, the New Hampshire Bulletin, is offering stories about my home state’s politics that are not found in other media sources. An article this weekend by Ethan DeWitt is a case in point. In “State’s Mayors Seek Restoration of Revenue Sharing” Mr. DeWitt describes a letter the 13 mayors in NH sent to the legislature pleading for a restoration of the full funding needed for them to keep their heads above water. The article offers a good overview of why the towns need taxes, but like most articles on efforts by States and the federal government to lower taxes it overlooks one reality: taxes are interdependent and, because some of the baseline services offered by government are necessary they must be paid for with SOME form of taxation… so… when federal or state taxes are cut without a clear and corresponding diminishment of services the result is s downshifting of taxation to a lower level of government. This ultimately means that local taxes of some form, which are predominantly traffic tickets, fees for service, and– yes— property taxes have an increased burden.

In case you haven’t gathered it from reading several of these posts over the years, New Hampshire is the poster child for the downshifting of taxes. New Hampshire has no broad based taxes whatsoever. No income tax and no sales tax. The result is a hodgepodge of fees-for-service, business taxes that are kept low in the name of competition, and a heavy reliance on property tax. The result is predictable. Property rich towns have lower tax rates, and more and better services than property poor towns. That, in turn, attracts affluent home owners and upscale businesses which sustains their relative property wealth. The rich get richer, the poor get poorer.

The solution to this problem is clear: broad based taxes should pick up the tab for as many basic services as possible and those taxes should be distributed in a fashion that ameliorates the inherent disadvantages low-tax-base communities experience.

Alas, no one in New Hampshire is willing to name this problem. And nothing illustrates this more than the recent suit against the Recovery Act by the NH AG. The vicious circle continues…..