Fiscal Policy Institute: BET tax cut would fail to spur business growth

January 27, 2026 - 02:12

A proposed reduction in New Hampshire's Business Enterprise Tax (BET), recently passed by the state's Republican-led House, would carry a significant annual cost to state revenues while providing minimal economic benefit, according to a new policy review. The analysis estimates the tax cut would reduce state treasury collections by approximately $26 million each year.

The central critique is that the tax reduction is poorly targeted to stimulate actual business expansion or job creation. The BET functions as a kind of value-added tax on the compensation and profits of businesses. Critics argue that simply lowering this rate does not directly incentivize new hiring, capital investment, or increased production. Instead, the financial benefit would largely flow to business owners and shareholders without a requirement or mechanism to reinvest those savings into the local economy.

Proponents of the cut argue it provides broad-based relief and improves the state's overall business climate. However, the opposing analysis contends that the substantial revenue loss would force cuts to public services, education, and infrastructure—key components that businesses genuinely consider when choosing where to locate and grow. The report suggests that targeted investments in workforce development and community assets would be a more effective use of public funds for fostering long-term economic health than a sweeping tax reduction. The proposal now moves to the state Senate for further consideration.