To pay for tax cuts for the rich, LePage budget shifts tens of millions of dollars onto the backs of homeowners

February 6, 2017 by
James Myall

James Myall

To see how the governor’s proposal to repeal the homestead exemption would affect property taxes in your town, CLICK ON THE INTERACTIVE GRAPHIC IN THIS BLOGPOST.

Governor LePage’s budget proposal offers tax breaks worth $23,000 annually to Maine’s 1%, while asking homeowners to pay an average of $300 more in already historically-high property taxes. The budget proposes elimination of the homestead exemption for Maine homeowners under the age of 65. The exemption provides vital relief from property taxes for more than 300,000 Maine families every year, of whom approximately 213,000 would be affected by the budget proposal.[1] You can examine the impact of the homestead exemption repeal on Maine’s communities in the interactive graphic below.

The value of the homestead exemption varies by town, and depends on a town’s property tax rate (also known as the ‘mil rate’). In 2017, those who qualify receive a reduction of $20,000 in the taxable value of their home. According to Maine Revenue Services data, the average property tax rate in 2015 was 15.64 mils ($15.64 per $1,000 of property value), which values the homestead exemption at 15.64 x 20 = $312.80. For residents of a town with a property tax rate of 12 mils, the exemption is worth $240 annually; for the residents of a town with a property tax rate of 20 mils, the exemption is worth $400 annually. Towns with struggling economies tend to have higher tax rates to compensate for the reduced property values and higher demand on services. The highest mil rates in the state can be found in towns like East Millinocket, Waterville, Lewiston and Eastport. The repeal of the homestead exemption would therefore have a greater impact on residents of those communities, where residents already feel pinched.

The governor’s proposal to cut income taxes for wealthy Mainers while raising property taxes for homeowners under the age of 65 is a step in the wrong direction. It shifts more costs onto low- and middle-income families already stretched by rising costs and stagnant wages. It also makes Maine’s tax system even more unfair than it was before. Wealthy families already pay a smaller share of their income in state and local taxes than everyone else. This proposal distorts that picture even more.

Governor LePage’s upside down tax plan is not the recipe for a thriving economy that works for everyone. It undermines our ability to invest in a stronger workforce, help young families succeed, build modern infrastructure, provide services our communities rely on, and address the priorities that benefit all Mainers now and in the future. Mainers, especially those who are working hard to make ends meet, deserve better.

Author’s note: Public hearings on the governor’s proposal to cut the homestead exemption are scheduled for Monday, February 6 at the Maine State House in Augusta. Members of the public are strongly encouraged to testify and share their concerns with lawmakers. To find out more about testifying or to get more information on this and other issues related to the governor’s budget click here.

[1] Maine Revenue Services data. Total homestead exemptions claimed in fiscal year 2015.  US Census Bureau data indicates that 69% of householders in owner-occupied housing in Maine are below the age of 65.

3 Responses to “To pay for tax cuts for the rich, LePage budget shifts tens of millions of dollars onto the backs of homeowners”

    This is outrageous, taxes shouldn’t be lowered on the wealthiest individuals at the expense of raising them on the general population!

  2. […] Interactive map from February 5, 2017 blog post, “To pay for tax cuts for the rich, LePage budget shifts tens of millions of dollars onto the backs of homeowners.” Use the map to find the impact of the governor’s proposal on property taxes in your city or town. To read the full blog post, click here. […]

  3. Sylvia Spear says:

    Since Maine is already the home of middle income retired citizens, the cancellation of the Homested exemption for our property tax is devastating. We have already been squeezed by the loss of colas (Social Security and MPRS), tax increases in our communities, and increases in our Medicare costs. Is the governor trying to get rid of us? I know that other states do not penalize their elders in this ways. I don’t want to leave Maine. I was born, brought up, graduated from UMO, and raised my kids here. Additionally, I served the State of Maine as a teacher for most of my teaching career. I believe we have paid our dues and taking away the Homested Exemption is grossly unfair.

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