‘A Big Income Tax Cut’
Editorial

‘A Big Income Tax Cut’


By BDN Staff
BDN Staff

How impressive is it that Maine lawmakers cut taxes despite the national recession? The conservative Wall Street Journal called it the “Maine Miracle.”

“No state has improved its economic attractiveness more than Maine has this year,” the paper’s editorial page said Tuesday. Republicans, apparently more intent on scoring political points than helping Maine families and businesses, want to undo this work.

Last Thursday, Maine Republican Party Chairman Charlie Webster, along with Senate Minority Leader Kevin Raye and House Minority Leader Josh Tardy, filed an application with the Secretary of State’s Office to repeal the tax reform bill passed by lawmakers the previous week.

The centerpiece of the package is a reduction in the state’s top income tax bracket, a long overdue move that will lower the state’s traditionally high tax burden. The top rate will go from 8.5 percent to 6.5 percent for incomes up to $250,000 a year. Income over that amount will be taxed at 6.85 percent.

“This is a big income tax cut, especially given that so many states in the Northeast and East — Maryland, Massachusetts, New Jersey and New York — have been increasing rates,” the Wall Street Journal wrote, noting that Maine’s tax will drop from seventh to 20th in the country.

Lowering the income tax also helps the many Maine businesses that file individual returns and encourages investment in the state, a likely reason the Bangor and Portland Chambers of Commerce supported it.

To balance the package — at a time when a recession has wiped out even the thought of budget surpluses — the sales tax was broadened, the meals and lodging tax raised and other small changes made. Broadening the sales tax base is necessary to stabilize state revenues, but it does mean Maine families will pay more sales tax, although this will be more than offset by lower income tax payments for most.

GOP Chairman Webster, who is leading the repeal effort, says the legislation harms the poor. This is an odd criticism because, at the behest of the governor, the tax reform package, which had been approved by the Legislature, was revamped to include a refundable earned income tax credit specifically for Mainers with low incomes.

Another target of Republican ire is the extension of sales tax to car repair labor (parts are already taxed). While this will hurt some families, those with the most expensive cars usually have the largest repair bill, so they will continue to pay more in taxes.

A provision levying the sales tax on candy that does not contain flour, while exempting that which does, is odd, but matches with a definition of candy that is part of a national effort to standardize tax definitions.

Calling the bill “An Act to Increase Taxes for 85,000 Maine Families,” Rep. Tardy focuses only on the negative effects of the legislation, which are outweighed by the benefits that will be realized by hundreds of thousands of families.

In the words of the Wall Street Journal, in Maine “tax cutting to promote growth and attract jobs is back in fashion.”

Repealing tax reform isn’t only out of fashion, it will shortchange Maine businesses and families.

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Comments
16 comments on this item

You left out the most important fact. Overall Maine people will save about $160 dollars per person/per year. Well that is unless they have to spend $3000 dollars or more on labor for vehicles. I hope no one wants to stay the night in a hotel to help makeup the rest of the difference. The facts are plain and simply that they are robbing Peter to pay Paul. In fact when it is all said and done the people of the state of Maine will end up paying more by the end of the year. The Republicans also said that they agreed with the reduction in state income tax, they just didn't agree with taxing other things, like hotel stays and labor on car repair. I will do all vacationing in NH and do my own vehicle repairs before I give the state more money. The person writing this opinion has not given all the facts only the ones that support the argument presented.

Taxedtodeath - Will it be a cold day in hell before you quit whining? For Godsakes sure they could have cut more but this is a good start. People like you all know where the Kittery bridge is, don't let the door hit ya on the way out.

taxtodeath1 - Good point. On you last sentence, however, when was the last time ALL the facts were given relating to anything government?

cm1113, since when is stating facts whining? The fact is that the average Mainer will actually be paying 3x more in taxes than they do now. Real reform would not have increased all the other tax brackets to be the same as the top tax bracket. This was a tax rearrangement and nothing else there is no break.

I did the math on my own income and expenses. I'll save $200 in income tax while paying about $50 more in sales taxes. Net gain of $150 for me. Looks like a tax cut, walks like a tax cut, quacks like a tax cut, it's a tax cut despite Republican whining. Fact is, government costs money. Those who want to cut only are fooling themselves into a Populist fantasy. If you want to see a society with no taxes, no government, and everyone owning guns, just look at Somalia.

Costs money to pave, plow and run a state government.

Money has to come from some where.

Dave martucci hit the nail on the head.

Don't like it move to Mexico.

“No state has improved its economic attractiveness more than Maine has this year,”

YOUR HIGH!!!!!

It will be interesting to see if the Republicans can muster up the support for a repeal.....good luck to them, but it looks doubtful to me. They haven't had much success of late.

So, those of us who drive older vehicles (many with 100,000 + miles and are paid for - note PAID FOR in other words, NOT paying a $400.00+ per month car payment) will either have to pay more in the form of taxes to fix our vehicles, or we can go buy a new one (which, until such a time as the junk they put on roads during the winter rots the undercarriage out, usually won't require much in the form of repair) and pay how much more in excise tax, car payments and insurance fees to operate them? While it sounds great on paper, it's the old cliche "Six one way, half dozen the other" to most families IMHO. It's a nice gesture, but really, let's look a little deeper and copy this quote from the editorial:

"Another target of Republican ire is the extension of sales tax to car repair labor (parts are already taxed). While this will hurt some families, those with the most expensive cars usually have the largest repair bill, so they will continue to pay more in taxes."

Now, pay attention to the part that says "While this will hurt SOME families..." I would venture (given the amount of older cars that I see filled with "families") that it will hurt a lot more than SOME families. Let's have a little "reality check" here: There's no money to pave roads now. Who do you think is going to pay more to repair front-ends - those who have "the most expensive cars" with newer front-end parts, or those who have older vehicles with more miles on the front end? Frankly, I could give a hoot about "Republicans and Democrats" "LIberals or Conservatives." Offhand, I'd say "There goes my $200 income tax savings - and then some."

Oh, how I love "fuzzy math."

Well I`ve said this before and I believe it to be true..This law is a real bummer to low income people,especially some of us older folks who don`t pay a lot of income taxes but do try to maintain a vehicle..so as to eat out often...What else is there for us?Now we will be forced to stay home all the time and probably give up our last little dignity.I`ll sign,if the petition shows up or if I find out where it is.

While this looks appealing (what tax cut isn't) don't be fooled by appearances. I'll be keeping about $100 of my income, BUT if I want to go out to eat or if my car breaks down or requires routine maintenance, I'll be making up for it plus more. The idea of this NEW tax is to force tourists to pay more and residents pay less. The people who will be most hurt by this are the poor people who don't pay income tax (they don't benefit from the cut) but DO pay for labor and all the other NEW taxes where there is little choice. Once again, the poor pay the price.

The other group of people this hurts is anyone who makes their living from Maine being a tourist state....Maine Vacationland -no more!

Tax reform huh? There is no way that you can say that you are offering tax relief if you are just shifting the tax from one place to another. I'll take my "extra " $200 and go to New Hampshire to do all my large ticket item shopping.The State collects an alternative minimum tax no matter if you have paid sales tax in state or not. I might as well pay no income tax somewhere else if I have to pay the state this minimum sales tax.If you really want to raise taxes, just say it's a BOND.The people of Maine just love to approve bond packages

All I have to know is that the Bangor Daily News supports this slight-of-hand. Look at the record The Bangor Paper has NEVER supported a tax repeal, they ALWAYS support tax increases. They supported the "snack tax" were against the taxpayers bill of rights, and they supported an increase in the gas tax, They also supported gas tax indexing so the government had cover from the anger of the citizens when the tax increased automatically.

One could argue that the income tax (by percentage) is the fairest of taxes because at least money is available to pay it.

BTW look at who isn't subject to a sales tax... That's right your friendly local newspaper!

Actually this new tax category will be a real catastrophe for the state becuase now it will encourage the legislature to revisit the income tax and impose higher rates for the future. The service tax will have to be supported by more personal enforcing the new tax structure. Further more it really doesn't add any incentives for citizens to try and attain a better life style.

Instead of pursuing alternatives such as cutting back and combining duplicating services in areas through out the state they invent a whole new tax which can be manipulated to fit their needs any way the government feels fit. This Service tax is a slippery scam and we all could become tax collectors for the state.

If they were true to their constituents they should have abolished the income tax all together and went with a sales tax base. they really accompished the to old adage. THEY ATE THE CAKE AND GOT IT TOO". Unfortunately it from the backs of the working people again.

Shifting sales tax to -out of staters-then exempting ski tickets and golf lessons-the democrats have truly left the working man. If they wanted to pass tax to out of staters the legislature would have included ski tickets. How can the govenor argue this with a straigtht face??

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