Maine’s Tax Solution: Fairness and Investing in Economic Growth

October 18, 2012 by

Maine’s Tax Solution:
Fairness and Investing in Economic Growth

MECEP’s new tax report should not be a surprise to anyone. It shows that income tax cuts made in 2011 are not the panacea that proponents have portrayed. First, the income tax cuts benefit mostly the wealthy. Second, they are not free; someone has to pay for them. The 125th Maine Legislature chose to have property taxpayers pick up the tab.

MECEP’s report demonstrates how the legislature cut state funds elsewhere to make up for the income tax cuts. The funds they cut include: property tax/rent relief for low-and middle-income Mainers; municipal-state revenue sharing that goes directly to reduce local budgets; and state aid for education, for which Maine voters dictated that the state should pay the biggest share.

So increased property taxes will gobble up any gain that a low-or lower middle-income Maine family and most small businesses might have gotten from lower income taxes.

You just have to look at a sampling of news headlines to see this happening:

Augusta: City taxpayers asked to cover for state cutbacks

Houlton: Property tax bills increase again in Houlton

Dixfield: SAD 58 budget approved; taxes to go up

Bath: The impoverishment of Maine municipalities

Vassalboro: State school cuts bump Vassalboro town budget

If towns don’t raise taxes, they are forced to slash needed town services: letting local roads crumble, closing or cutting the hours at the local library, or laying off teachers and first responders.

Not only do these income tax cuts shortchange our towns, they harm the state’s fiscal health. Just two weeks ago, State Finance Commissioner Sawin Millett warned lawmakers the state faces a $756 million structural gap over the next two years and that about half is due to the ongoing effect of these unpaid-for income tax cuts. A crisis of their own making, the income tax cuts by the governor and legislature were nothing short of irresponsible.

As if this isn’t enough, Governor LePage wants to cut income taxes even more with no evident plan to pay for it. The LePage administration, for all its rhetoric about fiscal responsibility, is showing none.

Income tax cuts that benefit corporations and the wealthy are not what Maine needs. We need a fair tax system that equally favors low-and middle-income Mainers. We need a rational, responsible, long-term fiscal plan that includes sustainable revenues to fund those things middle-class families depend on like education and Medicare and to allow the state to invest in roads, schools, and other job-creating measures. And we need it now.

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