The Best Education Funding Plan for New Hampshire

The best education funding for residents of New Hampshire ought to be the local property tax, our former system of education funding, with a tax cap provision for helping those whose income changes, or who are otherwise living upon limited retirement funds, capping property taxes at some reasonable percentage of income, such as 10%, so no one would be forced to pay more than 10% of his income in property taxes, and providing a separate statewide property tax for the Foundation Aid that will provide funding for those school boards which cannot collect 100% of the money they need for their education funding, using zero-based budgeting to establish the Foundation Aid goal for each year.

Education Funding

We need always to recognize that no one really likes taxes, that few taxes are truly fair for all people, and that taxes take money from people and out of their personal and community economies, reducing the money they have to spend, the products and services they can buy, and the businesses they can support, and the incomes of the people who work for those businesses, and the overall economy of the State of New Hampshire.

The best education funding is that wherein the parents pay 100% of the cost of educating their own children and have the right to a choice of schools.

This requires an economy in which parents can earn so much money they can easily afford to pay the cost of their children's education (estimated to be $5000-$7000 per student per year.

This not being the case for most parents, the people of New Hampshire have decided that because some of the best if not the best products of any generation are well-educated children who would then offer the possibility of good citizenship then the cost of education is to be spread among all citizens by taxing all citizens to benefit directly a few citizens, namely, parents and children, and to benefit indirectly all other citizens, in the form of better future citizens.

The second best education plan is home schooling wherein parents arrange for one of them, or someone they designate to be a tutor to their children, to teach their children at home.

This is not always financially possible for many NH families or guardians, for it would require one parent or guardian to work to pay for the cost of home schooling while the other parent, a guardian, or a tutor does the actual schooling.

The third best education funding plan is the local property tax plan by which citizens can create their own education plan (permitted by the State Constitution, Part II: Article 5), subject to the guidelines provided by the State Board of Education, and then fund their education plan by local property taxes (permitted by the State Constitution, Part II: Article 6). By this plan the people of a political subdivision pay for the cost of educating the children of their school district.

Moreover, this local education plan creates a sense of a local community, a "village" in which people take care of their own. If individual parents cannot afford the total cost of education then the citizens of the community to  which the parents belong can help. And in the sense of local community, local helpfulness, people can have a greater voice in the necessary policy-setting and decision-making for the local education plan and its related taxes. This greater voice is likely to increase the willingness to become involved of citizens who are nonparents as well as citizens who are parents.

Under NH State Const. Part II: Art. 5, the General Court/Legislature has the right by means of orders, directions and instructions to delegate the legislation of laws, policies and programs the funding (by property taxes) of programs to political subdivisions.

Political subdivisions can include school districts.

Under NH Const. Part 1: Art. 28, if under NH State Const. Part II: Art. 5 the people of a political subdivision desire to create their own school board, then they can elect representatives to a local school board, which can then function as a local legislative body for local education policies and programs, and by vote the people can consent to the school board members’ education plan and the funding of that plan by local taxes.

Under NH Const. Part 1: Art. 28a, if the people of a school district consent to being taxed by representatives they elect to their school board, who, in turn, have been delegated the authority of the NH General Court/Legislature to be a legislative body empowered to create an education plan and to tax the citizens of the school district, then the local education program is not a state mandate and the state is not required to provide funding by means of a statewide property tax.

And by this local education tax plan the people of a political subdivision do not legally plunder other political subdivisions to pay for the cost of their children’s education, as they would in a statewide property tax for education funding.

The people of a school district ought to fund their own children’s education and not depend upon robbing other people from other school districts. The NH education funding should not be a case of Robin Hood and the Merry Men stealing from the rich to give to the poor. This kind of thinking and action creates animosity among NH towns: donor towns are offended by having to pay for part of the education plans of recipient towns; recipient towns will want more money. There are people in donor towns who are not rich and who are seriously affected by the NH statewide property tax. Anyone who has had a tax break of 20%-30% has to realize that for them to have that tax break someone else has had a tax assessment requiring them to pay 20%-30% more in taxes. Is that fair? This seems to me to be a Robbing Hood approach to the education funding confusion.

The result of the current statewide property tax is current economic chaos that is prompting people who live in property rich towns but who themselves are not rich to consider selling their homes.

The French political analyst, Alexis de Tocqueville, toured the United States and was amazed by the democracy that was enacted and implemented herein. But he warned that this wonderful democracy would perish if the citizens ever decided to plunder the public treasury. Citizens can plunder the public treasury by demanding ready access to welfare, and by demanding more and more money from the welfare system. He knew that at some point those who work but pay for the lifestyles of those who do not work would become overtaxed and unable to enjoy a decent lifestyle and therefore would give up trying to be good citizens, at which point the United States would be vulnerable to political and/or military attack by those who would want to seize control of its Federal government and, ultimately, her people.

An Illinois lawyer, Ogden Brainard, once showed me a clipping of a newspaper article that stated clearly that one of the reasons the Roman Empire fell was the overtaxation of the middle class by the Roman Senators who pandered to the welfare class and allowed them to plunder the Roman treasury. The people of the Roman middle class became discouraged because they worked hard and paid so much in taxes to support the welfare class that they themselves began to lose their quality of life. The result was that the people of the middle class failed to rally to support the Roman government when Rome was attacked by foreigners.

We here in New Hampshire cannot allow politicians and citizens to raid the State treasury by passing broad-based taxes that force the wealthy to pay for the poor, whether to pay for a welfare class or a statewide school district.

We need to heed the lessons of history or we will unwittingly and to our detriment repeat the lessons of history.

What is fair? That people pay for their own children’s education--if not individually, then through their local community!

Those school districts presenting a fair education plan, such plan being defined as one that presents competent teachers to teach a minimum standard curriculum required for receiving a diploma, which districts cannot raise the entire amount of funding for their education plan through local property taxes shall receive the net balance from the education trust fund, which itself shall be funded by an excess property tax under a separate category of county property taxes.

The problem with Claremont I is the NH Supreme Court Justices’ willingness to overturn the 200+ year old NH tradition of regarding “cherish” to mean “encourage” rather than “support” a public education. This is malpractice, and grounds for impeachment.

In the old dictionaries still in existence at the NH State Library, the definition of "cherish" included  1. to encourage; 2. to support; 3. to "nurse up," with "to nurse up" meaning to help someone with a medical condition, just as "to nurse" means today. In those old dictionaries, "to support" could include giving financial support as well as encouragement, but there is no mandate that "to support" shall mean "public funding of an adequate education."

Why did the NH Justices choose to redefine "cherish" to mean "to support" and "to support" to mean "to provide a publicly funded adequate education to all NH students"? The tradition was that "cherish" means "to encourage," and to change this tradition means judicial activism. The NH Supreme Court Justices clearly are guilty of judicial activism. And judicial activism is malpractice and grounds for impeachment. Only NH Legislators should enact and implement NH laws and policies.

The problem with Claremont II is the NH Supreme Court Justices’ willingness to deny the right of the General Court/Legislature to delegate its authority (NH Constitution: Part II: Article 5, also Part I: Article 28 and Article 28a) to the citizens of political subdivisions known as school districts. Previously, the NH General Court/Legislature delegated its authority (per Part II: Article 5) and the citizens voted for members of a school board who created a proposal for an education plan and a tax plan to pay for the education plan (with local property taxes, NH Const.: Part II: Article 6), and presented the proposals to the voters of the district who then voted to approve or reject the education/taxation proposal/plan (per NH Const. Part I: Art. 28 and Art. 28a). This sequence satisfied the requirement that a state mandate is not a mandate if accepted by the voters of a political subdivision and thus did not require a proportional statewide property tax (NH Cost. Part I: Art. 28a). This denial of the right of the NH General Court/Legislature to delegate its authority to political subdivisions, too, is malpractice and grounds for impeachment.

The potential legal consequences of denying the NH General Court/Legislature the right to delegate its authority to political subdivisions are astonishing. NH cities and towns as political subdivisions derive the authority by NH General Court/Legislature's delegations of its authority. If NH cities and towns do not have their authority delegated to them by the NH General Court/Legislature, then they cannot delegate their authority to city/town officials and representatives including firepeople and police officers. This means that city/town police officials cannot arrest anyone. This means that sharp defense lawyers who recognize the central problem of Claremont II will soon be using the "Claremont II" legal defense by which they will claim that since the NH General Court/Legislature cannot delegate its authority, particularly, it cannot delegate its authority to NH cities/towns, then the police officers of an NH city/town cannot arrest criminals, and, therefore, the arrest of their client is illegal, and should be thrown out of court. The criminal mayhem that could result is almost unimaginable. How would you like it if a criminal who robbed you/burglarized your home/raped your daughter/beat up your kid got off because the NH Supreme Court denied the delegation of the authority of the NH General Court/Legislature to your city/town and to your police officials?

Under this NH Supreme Court denial of delegation of authority confusion, would city/town firefighters have the authority to fight fires? How would you like to see your house burn to the ground because your local firefighters did not have the delegated authority to put out the fire and thus save your house?

Moreover, using the logic that the NH General Court/Legislature cannot delegate its authority, if education is to be paid by statewide proportional taxes, why not require that all city/town budgets be paid for by statewide taxes? How would you like to pay for the budgets of Manchester, Nashua, Portsmouth, Keene, etc.? The people of recipient cities would love this, because their town taxes would go down, but the people of donor towns would hate it, because their taxes would go up.

It is clear and obvious that we have a problem with the denial by the NH Supreme Court Justices in Claremont II of the NH General Court's right to delegate its authority to political subdivisions, and it is therefore clear and obvious that we have to do something to address this problem.

I would propose a State Constitutional Amendment reaffirming the right of the NH General Court to delegate its authority to political subdivisions.

I would propose the impeachment of those NH Supreme Court Justices who voted for Claremont II on the grounds that such vote is clear and obvious evidence of judicial activism and an inability to correctly interpret the NH Constitution and therefore malpractice, one of the grounds for impeachment (in addition to bribery, corruption and maladministration).

The NH State budget is approximately $1,200,000,000 [1.2 billion dollars].

This budget has to be paid no matter what tax source(s) is (are) used.

The NH State budget is paid by a number of different tax sources, but one of the primary tax sources is the NH State property tax.

Every dollar of the NH State property tax generates approximately $70,000,000 [seventy million dollars]. [Source: Frank Sapareto, NH State Representative, Derry]

In 1998, my analysis proved that three groups of people pay NH property taxes:

Table 1: Percentages of the New Hampshire Property Taxes Paid By Groups of Taxpayers

New Hampshire Residents Nonresidents Businesspeople
48% 12% 40%

No one ever challenged the accuracy or the interpretation of these percentages.

Looking at these percentages, it is clear that NH residents pay almost half the NH State budget, and that nonresidents and businesspeople pay the other half.

Table 2: Percentages of the New Hampshire Property Taxes Paid By Groups of Taxpayers

New Hampshire Residents Nonresidents and Businesspeople
48% 52%

The fact that NH residents pay almost 50%/half of the NH State budget makes it easy to understand what would happen to NH residents if they had to pay all of the NH State budget if nonresidents and businesspeople paid no NH State income taxes.

If the property tax were abandoned as a tax source, then nonresidents and businesspeople would not contribute as much in NH taxes to pay for the NH State Budget [1.2 billion dollars] and NH residents would pay more taxes to make up for the loss of revenue not paid by nonresidents and businesspeople.

As nonresidents and businesspeople pay less and less NH taxes, NH residents will have to pay more and more. The worst case scenario shows that if nonresidents and businesspeople pay no NH taxes, then NH residents will pay 100% of NH taxes. This would cause residents to pay twice as much NH taxes, double what they now pay.

Table 3: Percentages of New Hampshire Taxes Paid by NH Residents If the NH Property Tax Is Eliminated

New Hampshire Residents

To pay 100% of the NH State budget, consider the following rumored approximate tax rates:

These are not encouraging numbers. And they are therefore not smart numbers.

But the numbers get more discouraging when we consider what would happen to NH residents if they were forced to pay the NH State budget by a State income tax.

Keep in mind that by an NH State income tax nonresidents and businesspeople would pay zero income taxes.

If the NH General Court/Legislature enacted an NH State income tax, because the US Supreme Court has ruled that an individual’s income can only be taxed by the state in which he works, those NH residents who work in other states will not have to pay NH income taxes. This will mean that those NH residents who work in NH will pay 100% of the State income tax. And that will mean a gigantic increase in their NH taxes. Not only will NH residents feel the tax burden resulting from the loss of revenues from nonresidents and businesspeople, they will also feel the tax burden  resulting from the loss of revenues from NH residents who work out of state (in other states).

If you vote for an income tax politician and he votes in an NH State income tax to replace the NH State  property tax, you are really going to get hurt at tax time.

If you are an NH resident who works in state and you own a $100,000 house and you pay $2000 in NH property taxes, if you vote to abandon the NH property tax and implement an NH income tax, then you can look forward to paying more than $4000 in NH income taxes.

We see, therefore, that in order to keep tax revenues from nonresidents and businesspeople the chances are excellent that NH politicians will keep the NH property tax in addition to an income tax. This means NH residents will pay both an income tax and a property tax. This means that NH residents can look forward to some genuine excitement at tax time.

An NH sales tax will hurt the NH border businesses whose people depend upon the difference between a 0% NH sales tax (no NH sales tax) and the 4%-5% sales taxes of our neighboring states to generate much of their business. Not only will the owners of these border businesses get hurt, the people who work for these border businesses will also get hurt. The closer an NH sales tax comes to the sales tax of a neighboring state, the less likely those neighboring state citizens will cross the border to buy from NH businesses. The less money NH residents make means the NH economy statewide will suffer. Many NH people will not have as much money to spend. Many NH people will lose their jobs.

The NH property tax is an open or overt tax. When you have to write a check to pay your property taxes, you know exactly how much you are paying. You can be happy, you can get mad, but at least you know exactly how much you paying. And because you know how much you are paying the chances are excellent that you will be motivated to keep spending as well as taxes under control. There is nothing hidden about the NH property tax.

A serious problem with state income and sales taxes is the fact that for most NH taxpayers state income and state sales taxes would be hidden taxes.

Most NH taxpayers who are employees will have their employer deduct their NH income taxes from their paychecks. They may not pay much attention to how much they are paying in NH income taxes. Sure, their first few paychecks that include deductions for the NH state income tax will mean less money, but most likely they will adjust, spend less because they have less, and go on with their lives. But they may not bother to determine how much they are paying in NH income taxes. In this regard, the NH state income tax will be, for most people, a hidden tax.

A similarly serious problem with an NH sales tax is that it, too, for most people will be a hidden tax. Most people will not keep track of the small purchases for which they will pay a sales tax and they will therefore never know exactly how much in total they are paying in sales taxes. Sure, the sales taxes for big ticket items such as automobiles and boats will be clear and obvious and painful, but the sales taxes for the little ticket items such as the comb bought at the local drugstore will not be clear and obvious and painful and thus most likely will be ignored. Thus NH taxpayers will not know the full extent of the damage to their personal fortunes and lives of the NH sales tax.

Open/overt taxes are good: you know how much you are paying, and you can motivate yourself to do something about the spending that causes them.

Hidden/covert taxes are bad: unless you work hard to keep track of how much you are actually paying, you may never know how much you are paying and therefore you may not be motivated to do something about the spending that causes them.

If you are not keeping track of the hidden taxes, the politicians will have a tendency to increase those taxes. It's all too easy: If you don't know how much hidden taxes you are paying, you won't know how much your hidden taxes are being increased.

From all this, it is clear that a property tax is the best form of taxation. It is an open tax. It is paid by nonresidents and businesspeople in addition to residents.

Moreover, the property tax is a form of an income tax. When an individual is working and purchasing property, he purchases property in accord with his income. No bank will lend to someone earning $20,000 per year the money to buy a $1,000,000 (million-dollar) home. It just doesn't happen. Therefore, an individual buys property in accord with his income, which is fair.

Now, many NH taxpayers do not have the income to pay their property taxes.

What can we do to help these taxpayers?

Property taxes rise for two reasons: 1. the increase in the value of property; 2. the increase in the spending by local, county and state officials, elected or appointed.

If an individual sees a substantial increase in the value of his property, at least he can take some comfort in the fact that if he has to sell his property he will gain a substantial financial benefit. True, he may lose the emotional/subjective value, but at least he will have the financial/objective value.

If an individual sees a substantial increase in his property taxes due to government spending, then he has the option of running for public office and doing something about his taxes through the legal and political system. And he always has the option of supporting and voting for those political candidates who promise to do something about his taxes.

But in spite of these options, many NH taxpayers will still have the problem of paying for their NH property taxes.

I would like to consider a tax cap, or tax liability l/imit, on the amount of NH taxes an individual would have to pay. Many NH politicians and political candidates are proposing a property tax cap of 10% (ten percent). This would mean that an individual would pay no more than ten percent of his income in NH property taxes.

We have to be careful with tax exclusions. The bill is still out there. The bill has to be paid. What one person does not pay someone else must pay. If we grant exemptions then we must find a way to pay for those exemptions. the bill will always have to be paid somehow, by someone.

We may want to limit the property tax cap to individuals whose income changes dramatically, as when an individual retires, or when an individual earns less.

We must recognize some kind of fairness and balance. It would not be fair for people whose incomes have not changed to pay for those people whose incomes have changed but who nevertheless can still afford to live in expensive properties. Those earning $30,000 per year and living in a $100,000 home will most likely not be happy paying the taxes of those earning $20,000 per year but living in million-dollar homes.

These problems can be worked out: if we have the will the way will be found.