Maine can learn much about itself through comparisons with its only contiguous New England neighbor, New Hampshire. Critics of Maine’s tax and economic development policies like to point to New Hampshire’s better employment, higher income and lower tax rates. But that’s only part of the picture.
Much of what can be learned through the comparison is that geography is destiny, and if Maine truly wants to follow the Granite State’s blueprint for success, it might result in a prosperous southern region at the expense of northern counties.
Some of the comparisons, recently highlighted in a report, must be seen in relation to each other. Both states have populations of about 1.3 million, but Maine people are spread over 30,854 square miles compared with 8,952 square miles in New Hampshire. That difference affects dozens of public policy matters. It means Maine has more schools and hospitals to manage, roads and bridges to maintain, and sewer treatment plants and water systems to operate. It means there are fewer and smaller population clusters in Maine in which to grow businesses.
New Hampshire does not have the broad-based sales and income taxes that Maine does, though it does assess an income tax paid by businesses. At the local level, the property tax rates in the Granite State are higher than Maine’s. And New Hampshire is not as generous with Medicaid benefits as Maine.
New Hampshire governments spend less per resident than any other New England state. Maine spends the second least. So on this count, given the geographic size, Maine’s numbers are not a source of alarm.
Perhaps the most stark difference is in median household income; New Hampshire’s is $67,508, tops in New England, while Maine’s is $48,568, the lowest among the six states.
So what is responsible for this prosperity? Is it the lack of a sales tax? That there are fewer miles of roads? Less generous Medicaid benefits? Or is the most influential factor New Hampshire’s proximity to the Greater Boston economic region?
The map of the region is telling. Interstate 93 leads from the Boston area to New Hampshire. If the growth of the mid- and late-1990s were to have spread into Maine, it would have had to creep up the narrow I-95 corridor and jumped into York County. York County has high-priced real estate, owing to its attractive coast protected by long-ago gentrified residential areas and tourist-oriented commercial sectors. An entrepreneur is more likely to establish a light manufacturing business in Rochester, N.H., than in Kennebunk.
Maine policymakers continually ought to evaluate how taxes are assessed and spent. New Hampshire may have hit upon a successful formula, though it has yet to be replicated in other New England states.
But the more powerful lesson from New Hampshire’s success is that population and its distribution matter. Rather than deride Greater Portland and southern Maine as if they were poseurs to Maine authenticity, or suggest that northern Maine secede, those regions should be seen as the economic drivers they are.
Copying New Hampshire’s tax policies and hoping they lead to success is like getting your hair done like Donald Trump’s and expecting to become a millionaire.