New Hampshire vs. Vermont: A Tale of Two State Tax Plans
New Hampshire vs. Vermont: The two small states share a border in New England, but aside from the rolling hills and maple syrup, they differ tremendously. These differences include population, commerce, and tax rates. Nonetheless, no two states in America share an identical tax plan, which is one reason why even neighboring states have vastly different economic landscapes.
Two Distinct Tax Plans
You could say that New Hampshire is from Mars and Vermont is from Venus. That’s because, despite only having a size difference of 264 square miles, Vermont has less than half the population of New Hampshire with 626,562 residents compared to New Hampshire’s 1,326,813 residents. Nevertheless, Vermont tax collections averaged $4,594 per resident, while New Hampshire collected about $1,791 per resident.
So why are these numbers vastly different? First, Vermont’s income tax burden is one of the highest in the country. The home state of Ben & Jerry’s Ice Cream has a top income tax rate of 8.95 percent, a top corporate income tax rate of 8.5 percent, and a state sales tax of 6 percent, none of which include local taxes. Meanwhile, the “Live Free or Die” state doesn’t tax earned income. Instead, it has a 5 percent flat tax that only applies to interest and dividend income, an equal 8.5 percent corporate income tax, and no sales or excise taxes.
One tax collection area where New Hampshire outpaces its neighbor: property taxes. Despite having a low taxes in other regards, New Hampshire has the third-highest property taxes of all 50 states, and with nearly triple the population of Vermont, it collects more. In return, these lower rates fuel the business and residential growth of the state.
With all of these facts considered, Wealth of States describes New Hampshire as outperforming Vermont in multiple areas. The first is population: “Between 2000 and 2010, the Granite State grew in population by 6.6 percent, or more than twice that of the Northeastern region as a whole. Neighboring Vermont grew by only 2.8 percent, while Maine, Massachusetts, and Rhode Island expanded by 4.2 percent, 3.1 percent, and 0.4 percent respectively.” In addition to population growth, New Hampshire surpassed Vermont in the following:
- Air traffic
- Interstate migration
- Income growth
- Tax-base growth
Income migration is another area where New Hampshire takes the prize. Between 1992 and 2011, Vermont gained $831.13 million in annual AGI while New Hampshire boasts $3.59 billion, according to How Money Walks.
Preferred Ways of Life
In Vermont, you won’t find billboards pointing you toward big attractions and you won’t find large, brightly lit cities that never sleep. A drive through this New England state is a throwback in time with long country roads adorned by small family farms, churches, and general stores. However, most Vermont residents prefer the quiet life. On the other hand, low taxes in New Hampshire have spurred the state’s growth providing residents with low unemployment levels, affordable housing, and access to nearby businesses and services that aren’t always easy to find in neighboring Vermont.
The end result is a small examination of how different two American states can be despite geographic location. New Hampshire vs. Vermont: Though they look similar on a map, the money doesn’t lie.