The Phantom Tax

On Tax Day, Kelly Ayotte staged a fight against an income tax nobody is proposing. The real bill gets paid by a generation — in property taxes.

About a hundred Granite Staters waited more than two hours outside Representatives Hall last Wednesday afternoon to testify on a constitutional amendment that would forbid New Hampshire from ever levying a personal income tax. They came because it was Tax Day. They came because the state’s Republican governor had asked them to. And they came because House Majority Leader Jason Osborne had labeled the amendment, without embarrassment, “the New Hampshire Advantage Amendment” — the same phrase the state’s political class has used for decades to describe a tax structure that is anything but an advantage for the people paying the bill.

Kelly Ayotte’s statement was brief and well-rehearsed: “New Hampshire is a beacon of freedom and opportunity because we’ve held the line against an income tax. No income tax — not now, not ever.” Senate President Sharon Carson, a Londonderry Republican, delivered the same line from the hearing room floor: “No income tax in New Hampshire. Not now, not ever.” The mantra carried the afternoon. What it did not do was identify the income tax anyone at the State House is actually trying to pass. House Democratic Leader Alexis Simpson confirmed the obvious in writing the same day: “An income tax has not and will not be considered.” One Democratic state representative, Thomas Oppel of Canaan, publicly supports a separate income-tax proposal circulated by former Executive Councilor Andru Volinsky in March; Oppel himself has said there is no plan to introduce that proposal as legislation or as an amendment this session.

That is the first and central fact of the Tax Day hearing. The threat being legislated against does not exist.

The Amendment, Decoded

CACR 12 began its legislative life as a supermajority rule. The Senate version, passed 16–8 along party lines on February 19, would amend the state constitution to require a two-thirds vote of the general court before any broad-based tax — income, sales, capital gains, or similar — could be enacted. Supermajority rules are bad policy but at least honest ones: they raise the bar, they don’t cement it.

The House version heard on Tax Day is not the Senate version. It is a non-germane amendment to CACR 12, numbered 2026-1134h, that rewrites the constitutional question entirely. Instead of a supermajority requirement, it imposes an absolute ban. The amendment would insert language into Part 2 of the New Hampshire Constitution prohibiting the legislature from ever enacting a tax on personal income. Not a high bar. A locked door.

The House already tried this in March and failed. On March 5, Osborne moved an income-tax-ban amendment during debate on an unrelated tax bill, CACR 10. It passed the House 194–158 — a majority, but short of the 60-percent supermajority required to place a constitutional amendment on the ballot. Wednesday’s Tax Day hearing was the GOP’s second try, repackaged and rescheduled to take advantage of the federal filing deadline.

The strategy worked, briefly, for the cameras. Republicans got their montage of “not now, not ever” testimony. Democrats got their hearing on what Simpson called a “partisan political stunt.” And House Republicans, who filed more than 500 bills for the 2026 session without finding room for this amendment among them, argued that a question they declined to raise in January was suddenly urgent in April.

The Pattern

The case for CACR 12 rests on the claim that New Hampshire voters have repeatedly demanded a constitutional income tax ban. That claim is a stretch. Here is what the record actually shows, laid next to the consequences that rarely make it into Republican talking points.

Taken together, the numbers tell a different story than the one Ayotte and Osborne are performing. A majority of voters in 2012 wanted a ban but could not reach the threshold. The Senate produced a strict partisan vote. Written testimony skews against. And while lawmakers debate a hypothetical tax nobody is proposing, the real revenue shortfall is already hitting payrolls.

The Forgone Billion

Every state needs revenue. In New Hampshire, it comes overwhelmingly from property — 63 percent of all state and local tax revenue, by the New Hampshire Fiscal Policy Institute’s count this month. No other New England state relies so heavily on a single, regressive source. And the reason property taxes have grown to carry that load is not mysterious: it is a decade of deliberate policy choices.

An April 2025 NHFPI analysis, building on earlier 2023 research, found that reductions to the state’s Business Profits Tax and Business Enterprise Tax since 2015 left between $795 million and $1.17 billion in “forgone revenue” that would otherwise have funded public services. Over the same period, New Hampshire’s business tax revenue grew more slowly than Maine’s or Vermont’s, both of which did not cut their rates. Nationally, state corporate tax revenues grew 192 percent over the decade; New Hampshire’s grew 124 percent. The rate cuts did not pay for themselves. They were not designed to.

When corporate tax revenue lags, the bill moves. It moves to the state’s downshifted obligations — education funding in particular — which move to municipal budgets, which move to property taxes. Simpson put the mechanic plainly on Tax Day: “Repeated corporate tax cuts passed by the GOP have reduced revenue over a billion dollars over the past decade, forcing property taxpayers to pick up the tab. This stunt does nothing to change that.”

CACR 12 would do something, though. It would guarantee, at the constitutional level, that the only broad-based revenue tool large enough to relieve the property tax could never be used. The amendment does not reduce the state’s need for revenue. It simply decides, in advance and forever, that the tab will stay on the property tax line of everyone’s monthly budget.

The Concord Warning

A reader looking for what CACR 12 would mean in practice does not have to speculate. The state capital is running the experiment now. Concord’s Board of Education approved a 12.2 percent property tax increase for the coming year — more than double its own stated ceiling — while cutting just under 40 staff positions district-wide, many of them teachers at Concord High. The teachers’ union president, Kim Bleier, a three-decade veteran of Concord schools, told the Concord Monitor that the staff cuts in this budget are the most sweeping she has seen.

The direct cause is the Claremont funding formula — the 1990s court ruling requiring adequate state school funding. Because property values in Concord have risen with the statewide housing surge, the formula calculates the city as less “needy” and reduces its state aid — $2.8 million less this year. Rising home prices made the city look richer on paper. In practice, they made the schools poorer and forced the city to raise the one tax it still controls.

Now project that mechanic forward ten years under CACR 12. The revenue hole persists because the constitution forbids any broad-based fix. Property taxes keep climbing. Local school budgets keep getting cut. And any future legislature trying to break the cycle faces the two-thirds voter-ratification bar the 2012 amendment could not clear.

The amendment’s supporters will call this “fiscal discipline.” Teachers being laid off to fund a tax structure locked in a generation ago will call it something else.

Generational Malpractice

The case for writing tax policy into a state constitution is always framed as restraint — binding the hands of future politicians. The harder question is whose hands get bound, and who benefits.

The Granite Staters most likely to benefit from a permanent income tax ban are the ones who already own the asset that carries the revenue load: a house. A retired couple in Wolfeboro with a paid-off home and a modest fixed income has every incentive to lock in property taxes as the ceiling rather than the floor of the state’s revenue structure. For them, CACR 12 is a hedge — it keeps the tax base where their wealth is already secured.

The Granite Staters most likely to pay for the ban are the ones who rent, who work for wages rather than capital gains, and who are trying to buy in at $530,000 median home prices with incomes that have risen 28 percent while housing rose 78 percent. A teacher starting her first job in Laconia, a new electrician building a company in Rochester, a nurse commuting from Franklin because Meredith is out of reach — these are the households that need a revenue structure more responsive to income than to assessed property value. They are also the households whose interests are not represented at a Tax Day hearing where retired commissioners from Pembroke and mayors from New Hampshire’s wealthiest towns test who can say “not now, not ever” with the most conviction.

This is the pattern Generational Malpractice describes. A political system that is functionally run by one generation freezes its preferences into structure — constitutional, fiscal, regulatory — so that the next generation inherits the bill without the authority to renegotiate it. The trick is to disguise the freezing as freedom. “No income tax, not now, not ever” sounds like liberty. It is, in practice, a limitation on every future Granite Stater’s right to choose a different revenue structure than the one their grandparents preferred.

The Show and the Cost

Here is what Simpson’s caucus said about the timing, in the release InDepthNH.org published on April 15: House Republicans filed more than 500 bills for the 2026 session, and a constitutional amendment banning an income tax was not one of them. By Simpson’s count, the House has considered 22 constitutional amendments so far this year and passed zero. Whatever the exact bill totals — the full 2026 session includes more than 1,300 bills across both chambers by the NH Timberland Owners Association’s tracking — the pattern Simpson identifies is the one that matters: this constitutional amendment was not a priority for the majority party until former Executive Councilor Andru Volinsky, a private citizen and not a legislator, unveiled a public proposal in early March that included a 3 percent income tax as part of a broader education funding overhaul. That plan has no legislative sponsor. It will not receive a committee hearing. It exists as a policy document and a speaking tour.

That is what triggered Ayotte’s Tax Day push — not a bill, but a document produced by a former official, denounced by the sitting Democratic leadership, carrying no legislative vehicle. The governor spent April 15 responding to a proposal her own party could not pass in March, rescheduled for the maximum photo-op value of the federal tax filing deadline.

The opposition at the hearing was not just the written testimony and the ghostly “~900” count. Executive Councilor Karen Liot Hill, a Democrat whose district includes Concord, spoke in person against the amendment. Somersworth Mayor Matt Gerding read from a letter signed by 75 local officials who warned that locking in the current revenue structure would only push more of the burden to property taxpayers. These are the voices the Tax Day camera shots tend to leave out. They are also the voices who will get dragged through the re-election cycle if CACR 12 ends up on the 2026 ballot — which is, of course, the point.

The political return is obvious. Ayotte has a re-election to run and wants to define the race as a binary choice between her and a Democratic income-tax threat, even if she has to import the threat from outside the legislature to get one. Pappas, the leading Senate candidate, gets tied to a position Volinsky articulated that Pappas has not adopted. Sununu and Brown, the Republican Senate primary contenders, get handed a turnkey wedge for their own campaigns. The GOP caucus gets its viral moments.

The cost is paid elsewhere. In Concord, in the 40 staff positions cut. In Laconia, where a teacher at the median salary cannot afford a home in her own school district. In every city and town that will absorb the next property tax hike because the state’s revenue structure is too narrow and its options are being narrowed further.

What Happens Next

CACR 12 may not pass this session. The underlying math is unchanged: Republicans need 60 percent of the House to place it on the ballot, and the March 5 vote showed they do not currently have those numbers. A non-germane amendment to a Senate-passed bill carries additional procedural risk. The measure goes to executive session one week from today — Monday, April 27 at 10:30 a.m. in Room 159 of the Legislative Office Building — and could die there. If it does, Ayotte’s office will still have extracted what it wanted from the Tax Day performance: a spectacle, a campaign-ready quote, and a ready-made wedge to use against any Democratic candidate who declines to pledge fealty to the status quo.

That, more than any policy outcome, is the point. The amendment does not need to succeed for the political work to be done. It needs only to exist, to get a hearing, and to produce the footage. When a future Democratic legislator proposes a modest tax reform to ease the property tax burden, the clip of Ayotte saying “not now, not ever” will play on a loop. The phantom tax becomes the real campaign ad.

The trouble is that phantoms don’t pay the bill. Granite Staters do. And while the governor performs certainty about a tax nobody has introduced, the teachers being laid off in Concord and the homeowners watching their tax bills climb in the Lakes Region are asking a different question altogether. It is the question the amendment is specifically designed to prevent anyone from ever asking in a legally binding way: if this revenue structure is failing us, are we allowed to try a different one?

CACR 12 answers that question in advance. The answer, written into the constitution, is no.

Dexter Dow is the editor of Granite State Report and the author of Generational Malpractice.