What’s wrong with the governor’s tax proposal, in one chart

April 16, 2015 by

There are two fundamental problems with the governor’s tax reform plan. First, it doesn’t adequately target tax cuts to low- and moderate-income Mainers. Second, it would force cuts to education, health care, and other critical services important to Maine people and businesses.

We can see this with a simple pie chart showing information from Maine Revenue Services’ distributional analysis of the governor’s plan. His plan provides $150 million in tax breaks for the top 10% of Maine households. The top 1% of Maine households—Maine’s seven thousand highest-income families—would receive one-quarter of the governor’s overall tax cut.

292M-Pie-Chart 4-15-2015

The “Better Deal for Maine” plan offered by legislative Democrats fixes this problem by targeting all of the tax relief at low- and moderate-income Maine families. On average, Maine families in the bottom 95% of the income distribution would get a tax cut under the “Better Deal” plan, while those in the top 5% of the income distribution would get a modest tax increase. As a result, the “Better Deal” plan would prevent harmful cuts the governor proposes in health care and allow for more investment in education and other foundations of a strong economy. More detailed analysis of the distributional impacts of the governor’s plan and the Better Deal for Maine plan can be found in a brief we released yesterday and covered here by the Portland Press Herald.

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