Tax Savings to Mainers Engaging in Cross-Border Shopping In New Hampshire

Read the full report | Maine shares a border with only one other state—New Hampshire. More importantly, from a tax policy perspective, the Maine- New Hampshire border represents one of, if not the, largest tax differentials in the country. According to the Census Bureau, in FY 2005, Maine’s tax burden—tax collections as a percent of personal income—was 45 percent higher than New Hampshire’s (13.03 percent versus 8.99 percent). This enormous tax differential becomes a powerful incentive for Mainers to do their shopping in New Hampshire.

There is no existing data on the extent of cross-border shopping. The Maine Heritage Policy Center has begun to conduct a study to estimate the economic and tax revenue impact of cross-border shopping. This study is based on visits to four Wal-marts, two Home Depots and one liquor store along the southern Maine-New Hampshire border on Saturday, December 1, 2007 where the number of Maine license plates were hand-counted at each store as a proxy for Maine cross-border shoppers.

Table 1 shows the actual number of cars counted during the first survey and various estimates of tax savings. The busiest store for cross-border shoppers was the Super-Walmart in Somersworth, NH with 162 Maine license plates counted. As a percent of all cars, the Portsmouth liquor store had the highest number of cross-border shoppers with approximately 30 to 40 percent of all cars having a Maine license plate. Clearly, people are voting with their feet.

About the author

J. Scott Moody is the Chief Executive Officer of MHPC. Scott has over 15 years of economic policy research and economic modeling experience from his work with The Tax Foundation and The Heritage Foundation. He has authored and co-authored over 150 published articles and books. He has testified twice before the House Ways and Means Committee of the U.S. Congress.