Close the FICA loophole: $300 million to cut property taxes and pay for schools

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As I sat in the Senate public budget hearing last week, listening to stories of schools closing and taxpayers fleeing property-poor towns, I decided, it is time. We need to raise more money. We owe it to our kids, and to our taxpayers.

There is a hearing on May 21 and it starts at 1 p.m., in State House room 103.

How does it work? Ninety-four of every 100 New Hampshire wage earners pay FICA tax on every dollar they earn. The other six stop paying the 6.2 percent tax after they earn $132,900. According to the NH Department of Revenue Administration, if we close that loophole, we could add over $300 million to state revenues.

How? Once high wage earners reach the $132,900 cut-off for federal FICA taxes, the payroll deduction goes to the state, instead. It’s as simple as that.

I discussed the idea with a fellow senator recently, a member of a different party. We reminisced about the days when we were earning above the cap. I asked if he would have been very upset if he had had to continue paying 6.2 percent on the overage. He thought for a minute, then shook his head.

“Probably not,” he replied. I agreed.

We could cut the statewide property tax – a tax no voter ever raised their paddle for – by half. We could reinstate stabilization grant funding. And more. It can happen if enough people just show up.

Sen. Jeanne Dietsch represents portions of Cheshire and Hillsborough counties, including Bedford, Dublin, Fitzwilliam, Greenfield, Hancock, Jaffrey, Lyndeborough, Mont Vernon, New Boston, Peterborough, Richmond, Sharon, Temple and Troy.

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