A friend of mine who lives in coastal Maine and winters in Florida owns a small business and made about $400,000 in 2011. (It is impolite in America to ask about salaries, so this is approximate.) He put $100,000 into savings and retirement, sold his small Florida condo and put $25,000 down on a larger house in his same Florida neighborhood. He lives well and without financial worry.
He was totally unaware that the 125th Maine Legislature passed tax cuts in June 2011 reducing his state tax rate from 8.5 to 7.95 percent (saving him about $3,000).
It had been a good year; while the stock market had been up and down, his business was still doing well. He seemed puzzled when I asked him if he would consider moving to a state with lower taxes so that he could take home more money. He likes Florida in the winter, but has no desire to move there permanently. He is a Mainer. His spending did not depend on his marginal income. Whether he earned $3,000 more or less was not particularly important to him — the tax cut had not registered.
A patient of mine with long-standing rheumatoid arthritis, or RA, lives in northern Maine and is a self-employed logger. He is single with one grown son. Because of his arthritis, he was out of work for 2006-2008, exhausted his savings, but became eligible for MaineCare, the state medical insurance program for the poor. Earlier he had been unable to afford insurance but with it — after a circuitous route with many medication failures — he was finally able to get on a “biologic,” one of the new class of medicines for RA. He is doing remarkably well and returned to work in 2010.
His prescription costs $15,000 per year. He has been told that with current state cutbacks to MaineCare he will lose his insurance because he is a “noncategorical,” a single adult with no dependents. Without insurance, he will do poorly, become disabled, eventually qualify for federal Medicare (but not without a 24-month minimum wait) and probably eventually get back on his “biologic” medicine.
However, if his RA is uncontrolled for the next two-four years, I doubt he will ever be able to return to work. He makes $30,000 per year and pays $3,000 per year in federal and state taxes. If he becomes disabled again he will cost society at least $40,000 per year.
The LePage administration and the 125th Legislature passed several different tax breaks in June 2011 that benefited Maine’s wealthiest citizens. The rationale was that this would stimulate business investment and help grow the Maine economy. (Despite the complete lack of any evidence that “trickle down” or supply side economics has any validity, these slogans still have political popularity.)
These breaks were unfunded; they were not accompanied by cutbacks in any expenditures or services. Legislators gave a politically popular tax break without dealing with the consequences of their false generosity.
The other shoe has now fallen. The state budget is $200M short. Cuts to education, general assistance for the poor, and medical and other programs are pending. The human cost of these cutbacks will be real, painful and ongoing. Mainers will be less well educated, less economically secure and less healthy.
Because the state mandates that all Maine towns and cities provide general assistance for the poor; Bangor cannot spend less, even if we wanted to. The cost of the Legislature’s sham “generosity” will fall on the backs of the poor — as well as middle class property taxpayers.
There is much hand wringing in Augusta about the difficulty of closing the budget gap. But there is little talk of its cause — the flawed judgment that led our governor and the 125th Legislature to give to the wealthy from the pockets of the poor and the checkbooks of the middle class.
The Legislature should have given those tax cuts the same scrutiny it is now giving budget cuts, for they are different sides of the same coin. Maine will prosper only when all Mainers recapture their buying power — it is customer demand that creates jobs, not waiting for entrepreneurs to spend their tax savings.
Augusta should reform Maine’s tax code in a way that expands the earned income tax credit, continues the circuit breaker program, reforms health care financing, restores municipal revenue sharing (shamelessly raided to balance the state budget) and honors the state’s promise of 55 percent aid to education. The investments we make in education, health care, job growth, roads, bridges and our infrastructure provide the foundation for business and economic growth.
Maine will succeed only if we invest in everyone’s potential.
Geoffrey Gratwick is a physician who practices and lives Bangor. He also serves on the Bangor City Council.
Here’s something else to think about:
Southern Maine is wealthier and has higher incomes than parts of Maine that are north and east of Augusta.
It follows that Southern Maine pays more income taxes than other, less well off parts.
On balance, Southern Maine money goes north and east as state tax monies are spent. The other parts of Maine receive more in tax money than they pay in state taxes.
Because they pay more taxes, Southern Maine will get bigger tax cuts than the rest.
Less Southern Maine money will be coming to the rest of Maine.
The rest of Maine, the less well off part will need to cut budgets or raise taxes to make up for lost Southern Maine money.
Southern Maine is also more liberal. They seem to want to send their tax money to help the rest of the state. Most of their legislators voted against the tax cuts.
Rural Maine is more conservative and doesn’t want Southern Maine to send them tax money for their schools, university campuses, courts, police, and other government services.
Pretty soon Southern Maine Liberals may figure out that Aroostook County doesn’t really want the University of Maine at Fort Kent and Presque Isle, Northern Maine Community College and that Washington County really doesn’t want the University of Maine at Machias and Washington County Community College. Maybe Southern Maine will just keep their money for their schools. That’s the way we’re headed because the other, conservative Maine has, by pushing income tax cuts, told them to keep their money. We don’t want it.
If the generous liberals in southern Maine wish to give more money to state government, what is stopping them? Do they not understand how to write checks? Maybe we should appoint a blue ribbon commission and create a task force to offer free classes in check writing so the generous liberals in southern Maine can learn how they can give more. Maybe as part of his “public service” Paul Violette can show them how to use gift cards as an alternate currency.
As far as taxes go, the author has solved all of our problems. We can just raise the income tax rate to 25% and everything will be unicorn farts and fairy dust. We certainly won’t see any Mainers who are capable of it living outside of Maine for 6 months and a day. Why that’s as much a myth as welfare fraud and well connected political hacks stealing from the agencies they are overpaid to run.
I’m sure you’re right. College campuses in Aroostook and Washington Counties should rely on donations instead of tax dollars. It’s the Conservative solution.
That’ll work.
You’re the one who said southern Maine wanted to send money. I’m just helping them understand the quickest way to go about it. Or were you not being truthful when you said they wanted to send a check. Like most liberals the thought of giving money is much more appealing than the actual giving. Check out the Obama’s and the Biden’s tax returns and see how much they give while telling everyone else they have to give more.
You’re right about relying on the charity of liberals. That’ll NEVER work.
The Obama’s gave 20% of their income to charity.
Yeah, once they found out that people were watching. Before that they gave 1% or less. Biden was at 0.3%.
Typical liberals.
http://www.usatoday.com/news/politics/election2008/2008-09-12-biden-financial_N.htm‘
“Biden gave average of $369 to charity a year”
http://www.nytimes.com/2008/03/26/us/politics/26taxes.html
“Although the campaign has not released the couple’s 2007 return, it has said the Obamas gave $240,000 to charity in 2007. This compares with charitable donations as low as $1,050 a few years ago.”
A real generous bunch…when they’re trying to get elected (Well, not the Bidens). Otherwise, not so much.
I’d be interested in knowing what charities they give too, as well.
Hmmm….lots of money to their church–nothing wrong with that. And what?! They tried to deduct $13,000 to the Congressional Black Caucus? Even this financially handicapped English major knows you can’t deduct political contributions. And this man became President? Gives me hope…
Yes, yes we all know you have a college degree.
Santorum contributed 2% to charity. Romney 12 %. Gingrich 2.6% However, he did contribute $500,000 to Tiffany’s
Wow. You really defended Obama and Biden with that post. Good job!
Colleges in Aroostook and Washington counties should quit charging whatever the market will bear and share the wealth. They should lower tuition instead of raising it. If they paid market rates undistorted by the government then students would still be able to work their way through college.
We’ve all heard your “send a check” solution to the problems of unfair or unbalanced tax allocation. It’s pathetic, ignorant and indicates a total lack of respect for and understanding of how society works. Your “send a check” mentality lets you ignore the fact that you benefit from the taxation that has created a socially responsible society with laws that protect you and your property.
The laws do much more to take my property than to protect it.
You haven’t tried living where your property isn’t protected. You have no idea how well you and your property are protected. You have nothing to compare it with.
Somehow New Hampshire manages to provide all of that without sales OR income taxes. I wonder how they do it. Maybe they have fewer Democratic political hacks living large at the taxpayers expense. You really don’t believe that Violette, McCormic, and the Maine bond bank were isolated instances do you? Typical liberal government. Some animals are more equal than others.
Check their property taxes.
Another myth perpetrated by the tax someone else more crowd. If they pay more in property taxes in New Hampshire it’s because they can afford bigger houses. The mil rates in New Hampshire are similar to those in Maine.
Someone asked that once before and I answered then the same way I will to you. I have two siblings living in NH, both with incomes and homes that are similar to mine. One lives in a major city, the other in a rural town. Both pay property taxes that range from 3-4 times what mine are. If my incomes goes down my income tax will go down, if their incomes goes down their property tax will stay the same.
Please tell me what the mil rates are in your town and in your siblings towns. Unless you live in the unorganized territories of Maine there are no towns in New Hampshire where the mil rate is 3 or 4 times as high as in Maine. That would be a rate of 45 to 60 mils. I await your reply. Thanks in advance.
Does that mean I should no longer contribute the thousands to local groups and charities I do now? After all I pay taxes.
Correct me if I am wrong, but the tax cuts have not taken effect yet. So the current budget problems stem from our current level of taxation not bringing in the needed revenue to fund all the programs put in place over the past years.
You are correct.
Thank you Dr. Gratwick for such a well written piece. I imagine you took the time to write this and do the homework to come up with your opinion because you care for the people of Maine–ALL the people of Maine; and in the hopes that maybe if people had practical information it would put bumper sticker concepts aside and cause people to think.
It saddens me to see the few comments so far and the mindset. The “I didn’t do it Mumma–he did it”. (per thegreatwandini). Did it ever occur to anyone that yes, it has taken years to piece together and “The human cost of these cutbacks will be real, painful and ongoing. Mainers will be less well educated, less economically secure and less healthy.”
The other way to look at it Mr. ….great…is instead of blaming the past, when all the drastic actions of this administration start taking effect–you ain’t seen nothin’ to what it will do to people who apparently aren’t as fortunate as you but to the whole economy. There are many in this state, especially in the northern half, who are hanging by a thread were it not for the few safety nets keeping them working. Dr. Gratwick gave a good example of the self employed logger and did the math.
Here is a sensible opinion given from someone who is not only a physician but puts in the effort and time to give it thoughtful consideration and is also devoted to the community by giving his time and knowledge to a city council and all you can devote is the same old broken record–you reap what you sow and you and the rest of us are in for a wild ride. Be careful what you wish for….you can tell the gods are mad at you when they give you what you want.
I am not trying to point a finger anywhere. I am simply stating a fact. There is no tax cut yet. Any budget issue at this moment has to do with the current tax structure and the current level of spending obligations.
The writer claims that one of his friends received an extra $3000 due to a tax cut. Well, if he did, it wasn’t any tax cut from LePage. The rate this man must have paid in 2011 was the top one of 8.5%.
As for his second example–well, I hope we can find a way to get this man his needed medication.
No, I don’t think your theory is a fact, it’s an opinion. For the sake of the discussion it doesn’t matter where the $3,000 came from. The point is it doesn’t make one bit of difference to the “haves” but in order to give to the “haves” it will devastate many hard working people in this state. This is a rural state comprised of a lot of working poor. This is another issue that is often misconstrued. Your theory believes it’s because of Democrats, yada yada….others believe there are great losses in efficiencies when there are many small towns separated by long distances and many other reasons that are overlooked and twisted.
That’s my opinion which is based on our family also being very similar to Dr. Gratwick’s example. I watch my 24 year old son with 2 babies working himself into an early grave. Fuel now takes 46% of his income, it’s my opinion that’s because of Wall St and the big oil companies and you want to give them and the “haves” more.
So many people who believe in the “trickle down” theory are quick to jump to conclusions about how these bills will work and who they will hurt–it’s the working people not the frauds. Same ideas as locks being for honest people. Your “trickle down” theory hasn’t worked and will never work.
My theory is not opinion. Look at the Maine Revenue Services website. It lists the 4 tax rates in effect for the 2011 tax year, with the top rate being 8.5%.
I am only wondering how the writer of this piece could have a friend who makes about $400,00o per year and who only paid 7.95% on his eligible income, saving himself $3000–when there is no such tax rate in Maine yet.
I don’t have any other theory.
That’s all you got out of Gratwick’s letter: the tax hasn’t gone into effect so the friend couldn’t have saved $3,000. That’s it? The horrendous inequality, the unfair tax policies that create that inequality and the fact that we have a governor that is intent on making the inequality greater didn’t register? Your next post is going to say “there will always be inequality, we can’t make everybody equal”. Of course there will. That’s not the point of the letter. The point is that the inequality is now so great working people are unable to afford medication that will help them continue to work. And this is happening because our governor is manipulating money in a way that benefits people that don’t need benefits and badly hurts those that can’t afford to be hurt.
So it’s okay to misrepresent the facts as long as your intention is good?
Sorry–I don’t work that way. The plain and simple truth works well enough for me. If you can’t make your case with the truth, then you don’t have a case.
Gratwick lied in order to make a good story.
So that one fact totally negates your responsibility to understand what the post is really all about?
You hit the nail on the head…
For the literal minded “Attention !!!! Sarcasm Alert”
It was just free money rattling around not doing anyone any good. Might as well give it to someone making $400,000 a year.
And ‘hope’ doesn’t cut it for that man’s medication. Stopping LePage from slashing Medicaid programs and acting like it matters what happens to others by setting up and funding programs is what is needed. Hoping doesn’t work.
The more I think about this op-ed piece, the more I am amazed that the editorial page editor let this one slip by. I know there is a broad definition of opinion that covers all sorts of misleading statements made in opinion pieces, and I am okay with that. But, Mr. Gratwick starts his piece off with something he is claiming to be fact, which cannot possibly be a fact. He is not saying he has a hypothetical friend who received a $3000 tax break by paying 7.95% on his 2011 taxes. He claims this person is real–and it just cannot be.
In addition, the writer is a public official in Bangor. I hope he doesn’t play so fast and loose with the truth when representing his constituents.
Goodness gracious, imagine an public official playing fast and loose with the truth … now where in Maine have I heard that before????
Get a kick out of the posters thinking they are taxed unfairly… Like their small group is the only ones unfairly taxed……….Bring on the flat tax…..
The reactions to this op-ed piece are revealing. Some dismiss the entire post as invalid because one fact is wrong. Others claim the poor don’t deserve support. And some give the well used and stale conservative answer to any social problem; let the liberals write a check.
Essentially the conservative posts won’t acknowledge the truth of Dr. Gratwick’s point: that our current governor and his tax policies are hurting the working poor.
Why not?