Keep the Spine: Fund NH Schools with Property Tax—not Sales or Income Taxes.

The following is the opinion of the author and should not be construed as the policy of the Sullivan County GOP or any elected representatives.

Parents owe their children an education before anyone owes Concord another revenue stream. The obligation runs from family to child, with the community as a secondary obligee because it lives with the downstream effects: neighbors who can read a budget, track a town warrant, evaluate evidence, and serve when called, voting, jury duty, and, in the broad constitutional sense, the unorganized militia. If we order duties that way, parents first, community second, state as backstop, the funding question looks different. The right mechanism keeps authority near consequences, makes costs visible to the people who approve them, and resists the political reflex to send the bill to “someone else.” In New Hampshire, that mechanism is the property tax, not a sales tax and not an income tax.

Start with the cash-register romance. Sales taxes are marketed as “fair” because everyone pays. That slogan only works if you ignore incidence. Families with lower incomes spend a larger share of their earnings on consumption, so a broad sales tax skews heavier on those least able to carry it. You can layer exemptions and credits, but that does not cure the structure; it complicates it. More importantly, a sales tax plants a rhetorical land mine under the statehouse carpet. The minute it passes, the same voices that sold “broad base, low rate” acquire a new refrain: the tax is regressive, families are hurting, we need relief. Relief becomes credits, carve-outs, seasonal holidays, and then the allegedly “balanced solution”, add an income tax. The “broad base” narrows; the rate rises to keep revenues level; regressivity becomes the ladder by which an entirely new tax climbs into law. You do not get stability; you get two engines, two lobbies, two compliance regimes, and a permanent excuse for the next ratchet.

The income-tax path fails differently. It invites the comforting illusion that we can vote for more “education” in the abstract and make “the rich” pay for it. That might be emotionally satisfying, but it breaks the link between decision and cost. Thomas Sowell wrote, “It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong” (Knowledge and Decisions, 1980). School finance is a textbook case. When the marginal dollar comes from a statewide income tax, the conversation drifts away from concrete trade-offs and toward slogans about “investing in our kids,” untethered to measurable results. Sowell’s broader reminder, “There are no solutions; there are only trade-offs” (A Conflict of Visions, 1987), is not cynicism. It is adult supervision. A funding design that muffles trade-offs will generate more spending debates and fewer performance debates.

Property taxes are not perfect, but they do the one thing a small, stubbornly local state should value: they tie decisions to place. The same people who vote for the school budget pay the levy, watch the buses, attend the games, and notice when the roof leaks. That proximity disciplines rhetoric. The warrant is not a theory seminar; it is line items attached to buildings and children you know. Visibility is not a bug. When taxpayers can see and feel the cost, they force prioritization; programs must justify themselves in plain language, year after year. And property taxes embed a real feedback loop. Communities that value effective schools see that value show up, at least partly, in property prices; communities that neglect basics see a different kind of capitalization. That is not the whole moral ledger, but it is a signal that sales and income taxes blur.

Set that localist ethic against the New Hampshire Supreme Court’s Claremont cases. Claremont I (1993) announced a state duty to provide an “adequate education.” Claremont II (1997) pushed the logic into funding and tax equity. These opinions sought to reduce arbitrary disparities, but they also encouraged a habit of thinking and legislating in statewide abstractions. The remedy conversation became a search for uniform levers: a “statewide” tax here, an equalization formula there, and heavy air quotes around the word “adequate.” The inevitable sequel cases, including those grouped under Rand (N.H.), tightened the screws on valuation, uniformity, and workarounds. (Details of Rand’s specific holdings are contested in lay summaries; for present purposes, the point is simple: the Court policed the mechanics of statewide fixes even as those fixes strained against local realities.)

The skepticism is straightforward. Courts are not good at running budgets. Constitutionalizing “adequacy” invites permanent litigation over definitions that vary by geography, demography, and community preference. Adequacy in Colebrook does not look like adequacy in Concord, and neither looks like Portsmouth. Yet the remedy logic leans on uniform instruments that convert local arguments into formula fights in Concord. That is the environment where Sowell’s warning about decision-makers bearing no cost applies with force. When adequacy becomes a statewide promise enforced by statewide tools, the practical answer is rarely to trust the town meeting; it is to design a tax that looks level on paper and then to build a bureaucracy to level it in practice.

None of this is an argument for leaving property taxpayers to sink. It is an argument for keeping the spine intact and tuning it where it pinches rather than swapping spines. Property taxes can be moderated with homestead exemptions, circuit breakers, deferrals for seniors with fixed incomes, and periodic, transparent revaluations. Towns can phase capital projects and right-size facilities. Boards can start from needs rather than last year’s number plus a percentage. Those are administrative fixes to a mechanism that fundamentally aligns payer, place, and beneficiary. By contrast, a sales tax is regressive by design and stays that way unless you lard it with exceptions that destroy the “broad base” rationale. An income tax is redistributive by design and tends to migrate upward through bracket creep and “temporary” surcharges that become the new normal. Changing the chassis because the shocks need work is bad mechanics.

It is essential to be honest about the slope from sales tax to income tax. It is not paranoia; it is the sequence we have watched elsewhere. Enact a sales tax to “protect property owners.” Discover, or remember, that the tax is regressive. Announce relief for the poor and middle class, which narrows the base and requires a higher rate. Conclude that the system is now both “unfair” and “unstable,” and propose an income tax to “balance” it. At that point, the political center of gravity has shifted. The rhetorical high ground belongs to those who promise statewide fixes, because the tax instruments to deliver those fixes already exist. The new default is to grow both engines together.

How do the Claremont cases fit into this? They heighten the temptation to centralize. If “adequacy” is nonnegotiable and equalization is mandatory, the cleanest path for a risk-averse legislature is to create broad state revenue streams and then engineer distribution formulas in the name of equity. But “clean” on a spreadsheet does not mean legitimate in a town hall. The better equilibrium is this: keep local property taxes as the backbone; define the state’s role tightly (targeted adequacy grants, transparent and predictable); and let communities argue openly about priorities they have to fund themselves. If the state wants to dampen extremes, it should do so with formula grants rather than by nationalizing the culture of local consent.

Return to first principles. Parents are the obligors; children and the community are the obligees. The state serves the obligation; it does not own it. A funding model that reflects that order will keep decision rights close to the facts on the ground and the people who bear the costs. Property taxation does that. Sales taxes do not, and they plant the seed for an income tax justified, ironically, by the regressivity of the sales tax itself. Income taxes do not, and they usher in the comfortable politics of spending other people’s money while insulating decision-makers from the price of being wrong (Sowell, Knowledge and Decisions, 1980). In the realm of public finance, as in life, there are no solutions, only trade-offs (Sowell, A Conflict of Visions, 1987). Choose the trade-off that preserves consent, clarity, and accountability. Keep property taxes as the spine, fix what they strain, and decline the ritual that starts with a sales tax and ends with an income tax because the first tax worked exactly as designed.