Editorial by Rep. Peggy Rotundo, D-Lewiston, the House chair of the Legislature’s Appropriations and Financial Affairs Committee. Editorial first appeared in the Bangor Daily News
A strong middle class. A solid foundation for our children’s future. A secure retirement for our seniors.
This is what Democrats are fighting for every day. We believe that if you work hard, you should be able to build a life for your family, put your kids on a pathway to success and expect to age in dignity.
Here in the State House, this is what we have in mind as we craft legislation, debate policy and build a state budget. Tax conformity is no exception.
States regularly face the question of tax conformity. The heart of the issue is whether a state wants its tax code to mirror that of the federal government and, if so, by how much.
A bill that deals with tax conformity is making its way through the Maine Legislature. There’s much to like about tax conformity, including predictability for Maine families and businesses that need to file tax returns in a timely fashion and tax relief for Maine’s small businesses, homeowners, students and teachers who use their own hard-earned money to provide supplies in their classrooms.
Democrats embrace the parts of the tax conformity bill that help Maine’s middle class grow and thrive. We strongly support the mortgage interest deduction because it helps Mainers become homeowners and establish their financial security, the deductions for higher education costs because they help young Mainers gain the skills to compete in a global economy, and the incentives for small businesses because they help them grow and create jobs in Maine.
But the tax conformity bill put forward by Gov. Paul LePage isn’t simply about syncing the federal and state tax codes. He has sent the Legislature a proposal that includes an element that needs our careful scrutiny. It’s called the Maine Capital Investment Credit, and it primarily benefits large corporations based outside of Maine. It would cost Maine taxpayers $23 million.
The Maine Capital Investment Credit is Maine’s version of bonus depreciation. But rather than precisely mirroring the federal program, it is altered in significant ways. These types of programs were originally intended to help the economy during the Great Recession, but it’s not at all clear how effective they truly are. It’s worth noting that no other New England state is adopting a program like this. That ought to give us pause as we decide whether this is the most fiscally responsible use of $23 million of Maine taxpayer money.
Democrats question whether this is the best use of $23 million. We see need in our classrooms. We know that property tax relief is needed by families, local businesses and seniors whose ability to stay in their homes is threatened by property tax spikes. We know we must also address priorities such as improving services for veterans, boosting economic development through broadband access and combating the drug crisis that is killing five Mainers every week.
Many school districts across Maine are grappling with the news that the state will be providing them with less support for education. Recently released projections from the state Department of Education indicate that in many local communities, the state share will be dramatically lower for the 2016-17 school year. Maine property taxpayers are facing a total shortfall estimated at $23 million.
This leaves communities in the position of making cuts in the classroom or having their local property taxpayers pick up a larger portion of the tab.
Will the education of a community’s children have to suffer? Will young families trying to get established and seniors on fixed incomes see their property taxes go up? Will towns have to cut back on services such as emergency personnel, road maintenance and trash pickup?
We cannot simply provide a $23 million tax break to large corporate filers headquartered out of state without close scrutiny. That would be an affront to Maine taxpayers — the families, seniors and local businesses that expect us to be working on their behalf.
If we are going to provide tax relief to businesses, we ought to prioritize the small Maine businessess that form the backbone of our economy. They make up nearly 97 percent of our employers, employ the majority of Maine workers and are committed to Maine communities.
We will not simply rubber stamp the governor’s proposal as is. We will fight for the best deal for Maine people. We will put Maine first.