AUBURN, Maine — Gov. Paul LePage pitched his plan to reform Maine’s tax system and realign the state’s spending priorities in a “town hall” forum at Edward Little High School on Wednesday.
LePage announced he intends to put a statewide ballot measure before voters in 2016 that would ask them to amend the Maine Constitution to eliminate the state’s income tax for good.
He told Eileen Heidrich of Turner that that way he would be sure his goal to end the state’s income tax completely could not be undone by politicians in Augusta.
“We are working on the language; we’ve been working on the language the last two days,” LePage said. “It’s going to put a specific date that the income tax has to be repealed totally in the state of Maine.”
LePage said he was hoping to set the year 2020 into his ballot question for that repeal to go into effect. Currently, nine states have no income tax.
LePage’s current proposals, parts of his two-year state budget package now before the Legislature’s budget-writing Appropriations Committee, offer sweeping reforms to the way Maine raises and spends money, including a dramatic reduction in the state’s income tax in exchange for an increase and broadening of the state’s sales tax.
Under his proposal, LePage seeks to reduce the state’s top income tax rate from 7.95 percent to 5.75 percent. His sales tax proposal includes increasing the state’s sales tax from 5.5 percent to 6.5 percent and broadens it to include most products and services sold in the state. Many services currently are exempt from the sales tax.
The move, LePage told the audience of about 100 people gathered in the school’s gymnasium, would push more of the state government’s costs onto tourists.
“The whole purpose of my budget is to make Maine more prosperous and to give the Maine worker the largest wage increase since the 1960s,” LePage said. “This is better than any minimum wage you can talk about. This will propel the economy for decades.”
LePage’s comment came just a day before the state’s largest labor unions will host a State House rally urging lawmakers to increase the minimum wage, which now is $7.50 per hour.
Other controversial parts of the proposal include a move to end state revenue-sharing with cities and towns and replace it with a property tax on nonprofit organizations that hold more than $500,000 in property.
Some Lewiston-Auburn area residents expressed reservations about that part of the plan.
“In Lewiston, we have seen both services cut dramatically and now tax increases because of some of the revenue-sharing shifts and really, it’s a tax shift to local municipalities,” said Jim Lysen, a Lewiston retiree and former city planner who is an active member of the progressive Maine People’s Alliance. “What I think your budget does is shift, rather than say what other cuts you are making on social services.”
Lysen said he wanted to know, “Why does it make sense to further exacerbate local municipalities with this tax shift and really, to the taxpayers themselves, … at a time when income equality and wealth equality is the worst it’s been in the history of the planet — so why now?”
LePage said the answer to “why now” was simple.
“Because, frankly, the income tax never should have been here,” LePage said. “Bringing in the income tax was the start of the downslide in the state of Maine.”
He said other states with lower or no income taxes were “booming.” He said the move would finally make the state competitive.
LePage’s budget proposal also seeks to reduce the state’s corporate income tax from 8.93 percent to 6.75 percent. The changes would put Maine about in the middle of the pack for corporate and personal income tax rates among the states.
The property tax on nonprofits LePage is proposing would most affect hospitals, private colleges, and other nonprofit entities, including nursing homes. But LePage reassured residents that churches would remain property-tax-free under his proposal.
“No taxes on churches,” LePage said. “No. 1 is, I never tax a church because the Almighty is going to get me.”
LePage said the tax he was proposing hits only the most property-rich nonprofits and they are also the entities that demand local public services, including fire protection and police response.
“I’m looking for those who use the highest amount of our services,” LePage said.
He said hospitals, colleges and nursing homes fit the bill. He also said he recognized they all contribute to local communities in other important ways but there was no uniformed way in Maine to assess service fees on nonprofits.
“They ought to pay a little bit for the services we provide,” LePage said.
LePage’s proposal to end taxing military pensions in Maine gained a round of applause. That initiative along with another that would exempt up to $30,000 of retirement income from state taxes and ending the state’s estate tax are parts of his budget proposal that he said were “non-negotiable” with lawmakers.
At the State House, LePage holds significant power in his veto pen with a divided Legislature that has Republicans holding the majority in the Senate and Democrats holding the House — neither party with the votes they need to pass bills on their own or override a potential veto.
LePage insists the pension tax cuts are key to keeping retiring Mainers in the state and for bringing new retirees, including younger military retirees looking to start a second career or bring business to the state.
LePage also said he’s heard directly from dozens who have left the state seeking to protect whatever “nest egg” they’ve saved up for their families from Maine’s estate tax.
To highlight his point, LePage asked one audience member, Ethan Strimling — an active Democratic commentator and former state lawmaker — which governor brought the income tax to Maine.
Strimling answered correctly. It was Gov. Kenneth Curtis, who served from 1967 to 1975. LePage then asked Strimling if he knew where Curtis now lives.
“Florida,” Strimling said to a spattering of laughter from the audience.
“Case closed,” LePage answered.
In a poignant moment, LePage told Melissa Dunn of Lewiston he would send staff Thursday to help her and her mother.
Dunn said proposed cuts to a state program that helps low-income seniors and people with disabilities cover the costs of their prescription medicines was forcing some to choose between food and medicine or rent.
LePage said Maine was only one of two states to pay for prescription drugs for people earning as much as 400 percent of the federal poverty level, about $44,000 for a single person based on 2015 standards.
Dunn charged LePage with passing tax cuts that mostly benefited the wealthy. He said his previous tax cuts included an elimination of the state income tax for 70,000 of the state’s lowest-income workers. He said the tax cuts were generally geared to help families earning less than $100,000 a year.
He said Dunn’s descriptions of his policy changes were not accurate, but he did agree that health care cuts to adults without children were enacted under his administration.
Dunn said she worked with people who were “going without food; they are going without their medications …”
“Ma’am,” LePage interjected, “I will tell you this. You give me the name and addresses and I will have people there tomorrow morning. I guarantee you that they will be taken care of, because what you are defining is not something I have done.”
LePage’s staff later said they offered to collect Dunn’s contact information, but it was unclear whether the governor’s staff would be reaching out to her Thursday.