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.