Senator Dietsch Proposes Closing FICA Loophole, Raising $200 Million to Reduce Property Taxes
May 16, 2019
Contact Name: Sara Persechino
Phone: (603) 271-3479
CONCORD—Today, New Hampshire Senator Jeanne Dietsch (D-Peterborough), who serves on the Senate Ways and Means Committee as well as the Education and Workforce Development Committee, submitted an amendment to HB 198 that would start a payroll deduction on high earners in order to reduce the Statewide Education Property Tax paid through local property taxes and fund other critical needs. The deduction would kick in at the point that the federal government stops collecting Social Security taxes. HB 198 and Senator Dietsch’s amendment, 2019-2031s, will be heard in the Senate Finance Committee on Tuesday, May 21 at 1 pm in State House Room 103.
Ninety-four of every 100 New Hampshire wage earners pay FICA tax for Social Security on every dollar they earn. The other six stop paying the 6.2% tax after they earn $132,900. According to the NH Department of Revenue Administration, payroll deductions on the amount above the cap could bring in over $300 million in revenues to the state from 42,000 wage earners. The 600,000+ NH employees who earn less than the cap would pay nothing.
Senator Dietsch’s amendment proposes to use the first $200 million to cut the Statewide Property Tax (SWEPT) assessment, currently set at $363 million. This would cut towns’ SWEPT assessment by 55%. Taxpayers could decide to keep that money, and/or use some of it to better fund schools. Because SWEPT includes extra funding for students that require more supports, reducing that tax would help needier districts most.
Senator Jeanne Dietsch (D-Peterborough) explained: “As I sat in the Senate public budget hearing last week, listening to stories of schools closing and taxpayers fleeing property-poor towns, it’s clear we’ve SWEPT our kids’ and property taxpayers’ needs under the rug for too long. This approach would make a dramatic difference in towns’ ability to balance the needs of schools and taxpayers’ ability to pay.”