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  • GOP gives huge tax breaks to top 1 percent while raising taxes for working Mainers and seniors

    Distributional analysis of Maine Republican and Democratic tax plans

    By Ramona du Houx

    The saga of sorting out the various tax proposals under consideration this year is epic. Yet, simplified, it comes down to two camps with different principles. One wants to strengthen the middleclass, grow jobs, and give a hand up to the working poor. The other wants to give Maine's top 1 percent huge tax breaks. The most recent Republican tax plan increases taxes for working Mainers and seniors while decreasing taxes for the rich. While the Democritic plan lowers property taxes and helps to lower some income taxes.

    When Gov. Paul LePage wrote his extreme tax plan into his budget proposal, he made it harder for lawmakers to sort out the actual two-year budget. LePage’s tax expenditures and breaks projected into the future, which is something a two-year budget is not designed to do.

    Seeing the damaging impact that proposal would have on citizens - as property taxes and sales taxes would certainly rise under LePage’s plan - Democrats revised it making sure middleclass workers and the poor would have “a better deal.”

    In an attempt to sidetrack lawmakers and refocus the media the governor announced his legislation to end income tax. The Tax Committee rejected that.

    Then, after months of work from the Appropriations Committee, the place lawmakers form the budget - the governor gives them a makeover of his original tax plan - at the last minute. Keep in mind adjournment of the legislature is in a matter of weeks. If they don't finish the work, taxpayers will have to pay for their extra time. Something LePage, no doubt, could have had in mind as he tried to ramrod his new plan.

    LePage's tactics are getting old. Even folks in his party are revolting. The following is what the economist Garrett Martin, of the Maine Center of Economic Policy has to say about their proposal:

     

    Legislative Republicans have released a tax plan that is a bad deal for working Mainers and seniors living on fixed incomes. Based on preliminary analysis the Maine Center for Economic Policy conducted in conjunction with the Institute on Taxation and Economic Policy, Mainers with income less than $57,000 will, on average, receive a tax increase under the Republican plan. That means approximately 60 percent of Maine people will get a tax increase on average if the Republican plan passes.

    The Republican plan is a bad deal. It prioritizes income tax cuts for the wealthy and corporations at the expense of the rest of us. Future impacts will be even worse as the Republican plan shifts more costs to low- and middle-income property taxpayers and it further compromises the state’s capacity to fund our schools, provide for low-income seniors, children, and people with disabilities, and maintain vital public services.

    The Republican plan reflects the discredited theory that income tax cuts will put Maine on the path to prosperity. They won’t. Maintaining public investments in our schools and communities will. And a robust and progressive state income tax is the foundation of such investments. This will not only help secure funding for public investments beneficial to all Maine families and businesses, it will also create a tax system where what the rich and poor pay in state and local taxes as a share of their income is more fair.

    Stay tuned as we release more analysis on the Republican plan. In the meantime, MECEP urges lawmakers on both sides of the aisle to work toward crafting a budget that includes both responsible, fair tax reforms that benefit middle- and low-income families and raises the revenue we need to fund education, health care, and other investments that will improve our economy and create opportunity for all Maine people.