AUGUSTA, Maine — Gov. Paul LePage said Wednesday he is willing to compromise on portions of his tax reform package but won’t back down on his goal to eliminate the state’s income tax.
During nearly 40 minutes at the microphone, LePage said that if he and the Legislature can’t agree on a tax reform package by July 1, when a new two-year budget takes effect, he’ll push for a statewide referendum in November 2016 that asks Mainers if they want to eliminate the income tax.
“If it doesn’t get done by July 1, 2015, it will get done in November of 2016,” LePage said during a news conference at the State House. “Where there is no compromise is that we want to eliminate the income tax. That will come from the people. I’m convinced that by 2016, the people of the state of Maine will be ripe to do it.”
Democrats responded that they would negotiate with the governor but that their line in the sand is that the compromise doesn’t put more pressure on property taxes, which they have argued for months would be the outcome of LePage’s plan in combination with other elements of his budget.
Democrats, who released their own tax plan last week, have amplified their criticism of LePage’s proposal. Several Republican lawmakers also have expressed reservations about the governor’s plan.
LePage said he intends to introduce a supplemental budget next year — midway through the 2016-2017 biennium — that would decrease the top income tax rate even further from the 5.75 percent he is proposing, to 4 percent.
Democrats countered that Mainers will come to understand that, while cutting the state’s income tax may seem attractive in a sound bite, the negative impact on state services and upward pressure on the state’s property tax would be devastating.
“If there were a way he could do that, he would have put forward a plan to do it,” House Speaker Mark Eves, D-North Berwick, said. “He is not able to do it, and he knows it. … He’s insulting our schools, our teachers and our students by saying we’re spending too much on education.”
When asked whether his package of tax cuts would necessitate a major shrinking of state government, LePage said most of the lost revenue could be made up by finding new efficiencies, such as online learning for public school students and a tiered welfare system that moves people from social services to financial independence.
“I think there’s a quarter of a billion dollars being wasted in K-12 education alone,” LePage said. “In education, we’re an outlier. We’re one of the states that’s been refusing to use technology to its fullest.”
While LePage argues income tax cuts would attract more residents and businesses to Maine, Democrats say putting more money in the hands of the middle class is the most effective way to bolster the economy.
“We believe in middle-class economics,” Eves said. “We think there is a lot of room for compromise. We just hope we can get to an end game.”
If LePage did push for a constitutional amendment to eliminate the income tax, it would take a two-thirds vote of both chambers of the Legislature before ever making it to the ballot. With Democrats holding a majority in the House, that’s highly unlikely.
LePage unveiled a Web-based tool he says Mainers can use calculate their tax savings under his plan, which is found at Maine.gov/Governor.
Wednesday’s news conference also included a representative from the conservative American Legislative Exchange Council, who highlighted a report that says Maine’s economy notably would improve under LePage’s plan.