Majority of lawmakers push for tax breaks for working families and want tax fairness

BY RAMONA DU HOUX

April 3rd, 2013 

“It’s time we gave a break to firefighters and farmers — not the millionaire who’s playing the stock market,” said House Majority Leader Seth Berry. “Democrats want to put more money in the pockets of working people, not give even more tax breaks to people who don’t need them.”

The Maine House took up two key tax measures on April 2, 2013: a Democratic measure to increase the earned income tax credit for middle- and lower-income families and a GOP proposal to give more tax breaks to the wealthy.

The two tax measures reflect the stark differences in the approaches between Maine’s Republicans and Democrats. Republicans also rejected a minimum wage increase for working people, while all Democrats voted in favor of the measure. The Economic Policy Institute recently projected that increasing the minimum wage to $9.50 an hour would generate $60 billion in new household spending in two years.

The majority of Republicans backed LD 65, “An Act To Reduce the Income Tax on Capital Gains,” which would provide tax breaks on investment income and the sale of capital assets. The House voted 91-55 against a GOP proposal to give a $40 million tax break to the wealthy. Rep. Eleanor Espling, R-New Gloucester, and Rep. Corey Wilson, R-Augusta, voted with Democrats in the House. The Senate rejected the bill to lower taxes for the wealthy with a vote of 21-14. Sen. Republican Pat Flood of Winthrop and Unenrolled Dick Woodbury of Yarmouth joined all 19 Democrats in voting against the bill.

“We need to fix our problems, and solve our budgetary challenges,” said Senate Majority Leader Seth Goodall, of Richmond. “We know for a fact this bill will cost the state $100 million, and will only benefit a few. This is the wrong priority for Maine.”

Maine Democrats put forth LD 455, “An Act To Increase the State Earned Income Credit,” to reduce taxes on the earned income of middle- and low-income Maine families.

Democrats say working families — not the wealthy — should be getting the break.

It is estimated that the earned income credit bill could cost $68 million in revenue through 2017. The proposal would also make the credit fully refundable if the payer’s tax burden is zero. Currently in Maine, the tax credit is only partially refundable.

According to Maine Revenue Services, the bottom 20 percent of income earners (70,000 Maine households that earn minimum wage or less) pay nearly twice as high a total state and local tax rate as the top 1 percent (7,000 households that make $320,000 or more). Taxes paid by the average Maine household are 14 percent higher than those paid by those making over $320,000.

“How can we deny a financial boost for low-wage workers and their families while providing more money to the wealthy for Wall Street investments?” said Rep. Adam Goode, the House chair of the Legislature’s Taxation Committee.

In the House, Rep Lance Harvell, R-Farmington, and Rep. Matt Pouliot, R-Augusta, joined Democrats in supporting the earned income tax credit.

The two bills were passed out of the Taxation Committee along party line votes.