#4 New Hampshire

 
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The overall freedom ranking is a combination of personal and economic freedoms.

 
#4
 
Overall
Change
-2
From 2009

New Hampshire State Overview

State Facts


Net Migration Rate (?) 2.8 % 
Personal Income Growth (?) 0.60 %
How does the freedom ranking relate to these?

Analysis

By the end of 2010, New Hampshire was no longer the freest state in the nation. The 2009—10 legislature hiked numerous taxes and fees and used one-time stimulus dollars and new debt to fund a significant increase in government spending.

In FY 2010, the state and local tax burden was 8.0 percent of personal income, seventh lowest in the country, compared to an FY 2000 figure of 7.5 percent, then lowest in the United States. State and local government consumption and subsidies stood at 9.0 percent of income in 2010, compared to 7.3 percent in 2000. Debt was at 18.8 percent of income, compared to 16.7 percent a decade earlier. While New Hampshire still scores sixth in the United States on fiscal policy, the famed “New Hampshire advantage” has dissipated. It is too early to tell whether the 2011—12 legislature, which enacted swinging spending cuts, has undone the damage.

On regulatory policy, New Hampshire’s ranking is mediocre, although it has slightly and gradually improved since 2001. Eminent domain reforms have gone far, but exclusionary local zoning laws have driven out affordable housing in the suburbs of southern New Hampshire. Labor-market freedom is subpar: the state lacks a right-to-work law and has a universal workers’ compensation mandate. Telecom and cable remain regulated. New Hampshire fares better than average on occupational freedom, and its liability system is one of the best.

New Hampshire remains one of the few states to score well on both economic and personal freedom. However, its personal freedom score has declined slightly since 2001. Gun control laws are among the most liberal in the country, but carrying a firearm in a car requires a concealed-carry permit. Effective retail tax rates on wine and spirits are zero. New Hampshire is the only state with no seat belt law for adults. Gambling laws are strict, however. The 2011—12 legislature repealed the ban on audiorecording public officials, after the closing date of this study. State approval is required to open a private school and home school laws are mediocre; the 2011—12 legislature has since liberalized them. That legislature also enacted a tax credit for private and home school expenses. These education reforms would have put New Hampshire in third place on personal freedom. Incarceration and drug arrests are low. Same-sex marriage was also legalized during this period.

Policy Recommendations

  • Enact tighter criteria for the issuance of state and local debt. Completely cutting off the $40 million in annual business subsidies and reducing interest payments by about 10 percent would permit a 20 percent cut to the business profits tax, which is one of the highest in the nation.
  • Enact a state law limiting what local governments can do to restrict new housing, such as building permit caps, minimum lot sizes, and so on.
  • Expand legal gaming beyond charity games, enact a social gambling exception, and change the “aggravated gambling” offense from a felony to a misdemeanor.
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