AUGUSTA, Maine — A joint public hearing of the Legislature’s Taxation and Appropriations committees Wednesday on Gov. Paul LePage’s tax proposals sparked concern over how to pay for the changes and what their actual effect would be on certain groups of taxpayers.
Albert Dimillo, a retired corporate tax director and certified public accountant from Portland, said he opposed all of the tax changes, but focused his testimony on the proposal that would increase income tax exemptions for retirement income starting in 2014. The proposal would raise the income limit to $10,000 in 2014 and reach a total of $35,000 in 2019.
“The proposed tax changes are not good tax policy,” DiMillo said. “Most retirees in Maine do not pay an excessive income tax; the vast majority of Maine retirees pay much more in property tax than income tax.”
He said tax policy needs to be given enough time to be considered properly, including time for lawmakers to weigh unintended consequences. He said tax changes do not belong in a supplemental budget.
But John Wakefield of the 15,000-member Maine Association of Retirees, a group of people who get pensions from the Maine Public Retirement System, said any tax relief will be welcomed by its members. Wakefield, a former staff director of the Appropriations Committee, was asked if he had any recommendations on how to pay the cost of the tax break, estimated at more than $93 million a year.
“No disrespect to your question,” he said, “but last session they cut the COLA [cost of living allowance] cap and suspended the COLA for three years. According to the Office of Fiscal and Program Review, that was $344 million in general fund money; I think most of our members think they have already given.”
The proposal also is popular with state workers, said Chris Quint, executive director of the Maine State Employees Association. But he said tax policy issues should be considered carefully and not as part of a supplemental budget.
“We would urge you to put this off to the next biennial budget,” he said. “There is a concern about where is the money coming from to pay for this in the future.”
Garrett Martin, executive director of the Maine Center for Economic Policy, a progressive think tank, said the proposal is “fiscally irresponsible” and should be rejected. He said it is unpaid for and could pose serious problems for future legislatures and governors.
“If we ask ourselves who are the older Mainers most in need of tax relief, more than likely it is not someone with a pension, it is someone who lacks the retirement security to stop working,” he said.
Several people testified in support of extending the sales tax exemptions that agricultural and fishery interests now have to horticulture and woods businesses. Jon Olson of the Maine Farm Bureau said the changes make sense.
“The horticultural industry is the only agriculture industry that does not have sales tax exemptions for needed equipment,” he said. “We have had six bills in past sessions to do this and they all have been passed and then died on the Appropriations Committee table. We hope it passes this year.”
The tax proposals also include a provision that would exempt income of a member of the National Guard or active duty military while serving on active duty outside of Maine. For example, the measure would mean National Guard members sent by the governor to help repair hurricane damage in another state would not pay Maine income tax on that portion of their pay.
The proposal also called for a tax break for sales and rentals of equipment used for respiratory ventilation, to kick in during the remainder of the current budget cycle.
The tax sections will be considered by the committee as they review the entire supplemental budget over the next few weeks.
The progressives continue to repeat their myth that reductions in taxes have to be “paid for”. Spending is paid for, not a lack of taking taxes from someone else. The spending is paid for by taxpayers. We don’t hear the progressives wondering how we will pay for their bloated government, and we didn’t hear them complaining about Baldacci’s tax increases in his budgets. But when taxes may be cut, we get obstructionist excuses to “slow down” and block reform.
Spending needs to be justified , so does Tax cuts for certain Deomgraphics.
It’s funny how conservatives always harp on cutting taxes and spending but when they get into office all they do is shift the tax burden downward toward the have nots to create more have nots all the while spending more and more on their pet projects (Friends, family, and selves like there’s no tomorrow). On November 6th I plan to vote two LePages out of jobs paying a combined 110K a year of our taxes. See liberals know how to save taxpayer dollars! Paul will have to wait his turn until 2014.
We need to increase taxes not cut them! And when you make the comment spend “our money” liberal at me just remember that between 1 in 5 or 1 in 4 Maine children live in poverty depending on where you get your statistics; but even the conservative figure is not acceptable in this day and age. Set the top rate tax rate at 12% and the lowest at 5%; we can’t fund the services we currently have and our schools funding are down the tubes in most districts across the state.
If tax increases don’t take place now, we’ll really going to be paying in 5-10 years simply to avoid the bankruptcy the “reduction” is eventually going to lead to. So go ahead and call me a tax and spender, point out that New Hampshire doesn’t have an income or sales tax (but have some of these highest property taxes in the country so the property owners support the state); things aren’t free folks and we need to take care of our children. I’m willing to pay more – what are you willing to do?
Tourism and farming are the backbone businesses in Maine, this is our strength.
Giving people living on pensions a tax break is an approach with enlightenment. These are wise frugal people for the most part and will spend their money within the ecomomy of Maine, what more could we ask?
Inviting tourists to spend time and invest in Maine and spend their money is good for business. We need some help out here! Is anyone listening?
Go Governor LePage! Keep working toward tax relief! No reason military retirees or public employees shouldn’t get the same income tax exemption as those with social security!
What a joke! LePage’s version of tax relief has the 95% and under crowd’s yearly savings amounting to the cost of a family dinner at McDonalds. The upper crust 5% can afford a new boat or car with their savings. Wake up people!!!
What is fiscally irresponsible and unethical is to continue taxing our seniors to death or to force our fine seniors to re-locate to Florida and Arizona for 6 months and 1 day. I don’t know about you, but when many of our seniors are forced to leave Maine, for 6 months and 1 day, we have a tax problem in Maine that needs some serious reform. Kudos to Governor LePage for his very reasonable proposals at making Maine an affordable place for our seniors. It’s about time we have a common sense Governor in the Blaine House, who cares about our seniors. As far as who’s going to pay for it. I would say LePage already has a good start because he is removing the many layers of corruption in state government (MTA, MSHA and DHHS next). This alone is saving millions of our heard earned tax dollars. Go get ’em LePage!
correction:minority
I know it must be difficult to believe that conservatives might also be struggling retirees attempting to survive in retirement after supporting all of the largess of the last 40 years of overspent government programs. I know it must be hard to understand that retirees who demand few if any government services should not want to pay the absolute maximum tax obligation Maine requires. It must be a very difficult concept to accept that all you need do is move across the border to N.H. to gain the same tax benefits of Florida, Arizona or some other desirable places to lay your head at night. Retirees live on fixed incomes and understandably need flexibility in order to maximize their spending needs. Do not demonize or make foolish comments about reducing meager pension benefits from a high level of taxation as being “fiscally irresponsible”. Keeping taxes low for elders is a responsible method of supporting our business community, maintaining available jobs within that community and embracing those that have built this great State from leaving for places that are far more inviting to live. Maine’s income tax structure is one of the most regressive, burdensome and anti job policies in the country and finally after 40 years someone in a position of leadership is looking to bring us more in line with the global economy within which we all live. Get over it!