New Hampshire's new governor Maggie Hassan claims link between low unemployment and taxes

Throughout her campaign, Maggie Hassan, New Hampshire’s new governor-elect, vowed repeatedly to veto any statewide income or sales tax that crossed her desk. But, even as she celebrated her victory, Hassan was asked to address the matter one more time last week, this time before a national audience.

Interviewing Hassan the morning after the election on MSNBC’s Daily Rundown, anchor Chuck Todd asked the newly elected governor about the prospects of a broad-based tax.

"I served in the state Senate for six years with retiring Gov. John Lynch. During that time, we had the fourth lowest unemployment rate in the country," Hassan told Todd during the November 7 interview. "Our economy works really well without an income or a sales tax."

Throughout campaign season and beyond, candidates commonly refer to New Hampshire’s unemployment rate as one of the country’s lowest. But, was it really fourth best in the country during Hassan’s time in office? We decided to check the books.

Federal counts show that the numbers fluctuated slightly during Hassan’s time in the Senate. She she served three terms between 2004-10 before running for governor this year. Amid the changes, New Hampshire’s rate remained among the lowest.

Here’s a year-by-year review.

2005: 3.6 percent unemployment, tied with Montana for fourth lowest.
2006: 3.5 percent, tied with Alabama, Delaware for seventh lowest.
2007: 3.5 percent, tied with Delaware, New Mexico for eighth lowest.
2008: 3.9 percent, sixth lowest
2009: 6.2 percent, tied with Iowa for fifth lowest
2010: 6.1 percent, fourth lowest

(As a side note, New Hampshire retained its spot as the fourth-lowest unemployment rate, 5.4 percent, in 2011, the year after Hassan left office.)

So, the numbers show Hassan’s claim to be in the ballpark. The state’s unemployment rate ranked fourth lowest in both her first year in office and her last, and even when it rose, it remained among the country’s lowest.

But, Hassan cited the state’s unemployment rate as evidence the state doesn’t need an income or sales tax. For purposes of this check, we wanted to look at the connection between taxes and unemployment rates to see if there’s a link as Hassan suggests.

Analysts say there’s no direct correlation.

Across the country, tax policy may contribute to a strong jobs environment, but a variety of other, more local factors likely weigh heavier in determining the unemployment rate, according to Scott Drenkard, an economist with the business-backed Tax Foundation.

"New Hampshire fits with the pattern of having low unemployment and having a good tax system, but there are lots of contributing factors," Drenkard said. "I can't say there's a very robust correlation (with the tax structure)."

Among the other states that rank among the lowest unemployment rates, for instance, Idaho, Vermont and Virginia all have both income and sales taxes. Hawaii, which had the nation’s lowest unemployment rate, had the nation’s highest income tax rate in 2005 and 2006, Hassan’s first two years in office, according to the Tax Foundation.

In New Hampshire, factors such as the state’s small population, its lack of big population centers and its demographics -- older and educated -- contribute heavily to its strong employment, according to Dennis Delay, an economist with the New Hampshire Center for Public Policy Studies.

"For an older population, they're more likely to have jobs and hold on to jobs than the younger population is," Delay said.

Further, New Hampshire features strong manufacturing and health care sectors, among others, that keep employment strong, even in economic downturns, said Annette Nielsen, an economist for the state Employment Security office.

"It’s a whole mix of things. We have fairly strong high-tech manufacturing, and that combined with not a huge population, it doesn’t take a whole lot to create (good employment numbers)," Nielsen said.

Put more succinctly, "There’s no real connection between unemployment and tax structure," said Jon Shure, director of state fiscal strategies at the national Center on Budget and Policy Priorities, a left-leaning think tank. "The key thing to creating jobs in any state is to make sure that you're investing in infrastructure, transportation, health care, all the components of a strong economy. … It’s not necessarily taxes."


Our ruling:

New Hampshire’s unemployment rate fluctuated a little through Hassan’s tenure. But, even as it reached No. 7 among states in 2006 and No. 8 in 2007, New Hampshire’s rate remained among the country’s lowest. And, by the time Hassan left office in 2010, New Hampshire’s rate had returned to fourth, where it stood in her first year.

We’ll give the new governor credit for getting her numbers right (mostly). But, her stated connection between the unemployment rate and New Hampshire’s tax structure doesn’t hold up. Analysts in New Hampshire and around the country suggest that other factors --  including states’ size, demographics and work base -- drive unemployment more than taxes.

We rate this claim Half True. 

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