NCPA - National Center for Policy Analysis

Court Ruling Spawns New Hampshire Tax Revolt

November 29, 1999

In 1997, the New Hampshire Supreme Court ruled that the state's long-time practice of financing schools almost entirely through local taxes -- with different rates for different towns -- was unconstitutional. Trying to comply with the court's order, the state's legislature passed a new statewide property tax recently which has many there up in arms.

At issue is what the court saw as the obligation of property-rich towns to support the education of students in poorer areas. Similar debates are cropping up in other areas of the country.

  • Eighty percent of residents in the state will see their taxes remain the same or drop, while 20 percent will have higher tax bills -- mostly those who live in cities and towns along the coast.
  • The Board of Selectmen in Rye, N.H., have voted to put state officials on notice that although they will collect the taxes, they do not intend to remit the money -- about $2.6 million -- and will file a lawsuit challenging the new system.
  • Rye will ask the court to escrow the money -- but if it will not, Rye will itself escrow it until a decision is reached.
  • The towns of Portsmouth, Newington and Hampton Falls, as well as several other towns have similar plans.

During the past two years, Vermont faced a somewhat similar court decision and enacted a somewhat similar tax plan -- which generated significant bitterness between wealthier and poorer towns.

Source: Carey Goldberg, "A Tax Revolt Grows in New Hampshire," New York Times, November 27, 1999.


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