Maine income tax reductions put on hold

December 30th, 2009 · Filed under: Business & Innovation, Community Maine · No Comments

Maine voters will decide in June whether to repeal a sweeping tax-reform law, which was signed by Gov. Baldacci last June. The Democratic measure, no Republican lawmakers voted for it, would have restructured how Maine’s tax system works, making the system more equal. People earning $20,000 have an unfair burden, which would have changed. Now the people of Maine will have to get the vote out, for tax reform, come June.

The vote will be held June 8, which is when Maine’s political parties will choose their nominees for governor and legislative seats. A bond question dealing with helping to fund Maine’s continued research and development in offshore wind will also be before voters.

It eliminates deductions and exemptions, replacing them with a credit system that Maine Revenue Services estimates would lower the income tax for 95 percent of Mainers.

The law would reduce the top income tax rate, from 8.5 percent to 6.5 percent, for people earning less than $250,000 a year, and set a rate of 6.85 percent for those who earn more than $250,000.

The law won the attention of the New York Times. Their article, “Maine’s miracle” said Maine was the only state to lower income taxes for everyone, during the recession.

There are increases on certain fees, which would be paid mostly by out of state residents. Maine Revenue Services estimates that 86 percent of Maine taxpayers would see an overall reduction in taxes.

The law, most of which was to take effect January 1, 2010, has been put on hold pending the outcome of the people’s veto promoted by Republicans.

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