Gov. Paul LePage has long touted the importance of lowering and ultimately eliminating the state’s income tax rate. The Republican Party has taken up his call, after lawmakers rejected it last year, and is collecting signatures to get a referendum question (or two) about welfare and the income tax on the November ballot.
“We must remove the burden that the personal income tax places on Maine families — from retirees on fixed incomes to job creators — by amending the Constitution of the State of Maine to eliminate the personal income tax levied by our State once and for all,” LePage wrote in an April 17 letter to legislative leaders.
But, it turns out, Mainers aren’t buying the governor’s faulty logic. According to a recent poll, Maine people would rather see their property taxes reduced. Asked what tax they would most like to see cut, 48 percent chose the property tax. Thirty percent said they would prefer an income tax cut, and 13 percent chose the sales tax.
The political action committee run by Sen. Tom Saviello, a Republican from Wilton, paid for the poll. Saviello said he wanted to do the poll to find out what Maine residents were thinking before the Legislature heads back into session early next year. Twenty-eight percent of those polled said they considered themselves strong conservatives, compared with 16 percent who said they were strong liberals.
In running for election and re-election to the Legislature, Saviello said he has knocked on doors for 13 years. Maybe six times, he said, he has heard from residents in his area who wanted the income tax lowered. He has heard thousands of times, though, that property taxes are too high. The mill in Jay where he worked struggled to compete with mills in other states where property taxes are lower. Corporate officials rarely mentioned income taxes, he said.
“Property taxes, it is always property taxes that people say are too high,” Saviello said.
This makes sense. Maine residents and corporations pay far more in property taxes than they do in income taxes. And the property tax, collected by the local government instead of the state, is much more regressive than the income tax.
Forty-three percent of all taxes collected in Maine in 2009 were property taxes, both residential and commercial, according to Maine Revenue Services data. Income and consumption taxes accounted for 28 percent each of total tax collections. Maine ranked sixth in the nation in 2007 for the percentage of income residents paid in property taxes (4.85 percent) and 17th for the percentage of income paid in income taxes (3.21 percent), according to Maine Revenue Services.
The average property tax bill in 2009 for homeowners earning $12,167 or less — the bottom 20 percent — was $2,006, or 30.6 percent of income. The top 10 percent of homeowners — those earning $108,724 or more — paid a larger average property tax bill, $5,258, but it accounted for just 2.5 percent of income.
“Based on both its ranking as compared to other states and its amount, the property tax should have been the first tax to be reduced if the budget allowed it,” tax expert Albert DiMillo of South Portland wrote in a 2012 column for the BDN.
Of course, tax rates are not equal across the state. Service center communities such as Bangor, Caribou and Lewiston tend to have higher rates. So do communities without a lot of taxable property value. Millinocket, for example, has one the state’s highest property tax rates, at nearly $30 per $1,000 of value.
Soaring property values, especially in coastal communities, can make it difficult for long-time residents to afford to maintain their residences in these areas.
If LePage really wants to remove a burden on Maine families, retirees and businesses, he would work with local government leaders — instead of just criticize them — to lower property taxes. And he would abandon a wrong-headed quest to lower or eliminate the income tax — a move that would inevitably result in higher and higher property taxes for those least able to pay them.
