State Rep. Seth Berry wants to reverse the tax code former Gov. LePage put in place that gave the 1 percent of Mainers huge benifits but hurt the middle class and poor.
Rep. Berry said that Maine needs to do what the Obama administration did when they came to office and reversed the Bush era tax code that enriched the one percent but hurt the middle class and poor.
“Maine’s tax code is regressive. The top one percent, in particular, pays a significantly lower share than the average Mainer,” Rep. Berry told the legislature’s Taxation Committee on May 6, 2019. “When all state and local taxes are combined, it is factual to say that incomes are more unequal in Maine after state and local taxes are collected than before. That’s a problem.”
In February, Governor Janet Mills introduced her first budget proposal, leaving LePage's tax cut for the 1 percent in place. But now she faces new costs, like paying the Federal Government for how Gov. LePage mishandled Riverview Hospital. She's also holding back on other programs because of lack of revenue.
Under Maine’s current tax code, the top one percent of households pay into state and local taxes, on average, at an effective tax rate of 8.6 percent of their yearly income. That is lower than the bottom 20 percent, which pays 8.7 percent - far below the middle 20 percent, who pay 9.6 percent.
Rep. Berry's legislation, LD 1647, would create an effective tax rate floor below which wealthy Mainers could not fall. To do so, it would apply a “tax equalization assessment” on individuals earning over $250,000 a year, and married couples making over $400,000, if they pay less than the average effective tax rate of the bottom 99 percent of Mainers.
“Even if we don’t believe in a progressive tax code, even if we just believe it should be flat with everyone paying the same percentage of their income, we’re not even accomplishing that,” said Rep Berry. “We are, in fact, doing the opposite.”
Under the proposed legislation, the additional revenue would be redirected into further funding the Homestead Exemption, the Property Tax Fairness Credit, and the Earned Income Tax Credit — three programs designed to shape a more progressive tax code by lowering the effective tax rates for low- and middle-income Mainers, who pay, on average, a larger percentage of their income on regressive sales and property taxes than the wealthy do.
Rep. Berry, who served four terms during the Baldacci administration in the Maine House of Representatives, and is back serving said that Maine’s tax code became more regressive during the LePage administration when income tax cuts favoring the wealthy were passed in the 2011 and 2015 state budgets, alongside cutting estate taxes and creating new tax havens for large corporations.
To shift the tax burden away from the wealthy LePage made minicipalities have to raise property taxes, and sales taxes went up too.
LePage’s tax cuts were not paid for, Berry explained, instead, “It was essentially kicking the can down the road, putting it on the credit card. We’ve been paying for it ever since, by not funding our schools, by not getting to the 55 percent that we hoped for, by trimming municipal revenue sharing, and essentially taking it out of working families and the middle class.”