Question 2 asks: “Do you want to add a 3% tax on individual Maine taxable income above $200,000 to create a state fund that would provide direct support for student learning in kindergarten through 12th grade public education?” I could go into detail why this law is not well written and that there is no guarantee that any of this additional revenue will be used to increase spending on education, but I will only address the tax side of this issue.

The proponents of this issue have said that the tax increase will affect only 3 percent of Maine taxpayers and that it will make them just pay their fair share. Others have stated that this will correct for the huge tax cuts already given to this group when the top individual income tax rate was reduced from 8.5 percent to 7.95 percent in 2013 and then to 7.15 percent starting in 2016.

Based on the money being spent on this referendum and the fact that most Mainers do not understand Maine taxes, this will likely pass. Maine will have the second highest top income tax rate in the country. In the end, I blame Gov. Paul LePage and Democrats and Republicans in the Legislature, who lowered the top income tax rate — without many receiving any tax cut — but allowed an uninformed public to believe that the top 3 percent had disproportionately large tax cuts and that a “small surcharge” would correct for these “unfair” tax cuts.

Over the past seven years, I have seen numerous poor tax policies made based on the irrational notion that there are always winners and losers in “tax reform” and that significant tax increases for a minority of taxpayers to help pay for minor tax decreases to the majority is fair. In addition, as has been the case with several tax changes since 2010, the vast majority did not understand the details, allowing Democrats and Republicans to claim they cut taxes when in fact total Maine taxes — income, sales and property — have increased.

I have written and commented several times that I was against lowering the top rate from 8.5 percent. The major problem with Maine’s income tax before 2012 was not the top rate but that the top rate started at too low an income level. The current referendum’s $200,000 taxable income level I believe is fair, but the rate should be 8.5 percent, not 10.15 percent.

Maine Revenue Services issued a distribution analysis in June 2015 that estimated that the top 1 percent of Maine resident taxpayers would pay about $368 million in Maine income taxes in 2017. The proposal to increase the top rate from 7.15 percent to 10.15 percent would increase the tax collected on these 7,009 taxpayers by about $114 million, or about $16,250 each. In addition, these 7,009 Mainers would see their total income tax increase on average from $52,500 each to $68,800, or a total tax increase of about 31 percent. This same analysis showed that the tax cut this group was getting from the rate decrease from 7.95 percent to 7.15 percent — less impact of loss of itemized deductions — was in total $19.3 million. Accordingly, the “small 3 percent surcharge” tax increase will be $95 million more than the tax cut they will get from the 2015 tax law change.

The 2016 and 2017 “income tax cut” from lowering the tax rate from 7.95 percent to 7.15 percent was paid in part by eliminating all itemized deductions for high-income taxpayers and eliminating the majority of the tax benefit of itemized deductions for middle-class homeowners. In 2015, the fact that more than 12 percent of the Mainers who itemized deductions would have a tax increase was justified because it was used to give a small tax decrease to the majority of Mainers. The biggest losers in 2016 will be higher-income elderly, who have significant medical expenses and those who give very generously to charity.

The Maine Revenue Services analysis that calculated a $19 million tax cut in 2017 was the net for the top 1 percent. There were winners and losers in this group. On average, the winners (81 percent) had an average tax decrease of $4,543, while the losers (19 percent) averaged a tax increase of $4,446. The loss of itemized deductions greatly exceeded the benefit of the tax rate cut. For this group of “losers,” the largest itemized deduction by far is charitable contributions. Accordingly, the so-called “tax cut” passed in 2015 was actually a significant tax increase for the most generous Mainers, who we should be trying to keep in Maine. Between the tax increase from losing itemized deductions and this “small surcharge,” many in this group could see tax increases of 40 percent to 50 percent from their 2015 tax. In my book that is not making them just pay their “fair share.”

I often have argued that the suggested small tax rate cuts passed in the past will have little impact on individuals and small businesses looking to move to Maine, but the combination of eliminating itemized deductions and raising the top tax rate to 10.15 percent is very significant and can only hurt Maine’s economy in the long term. Maine will have the highest taxes for those earning $250,000 in the country. California has a slightly higher top rate, but it allows itemized deductions.

After this referendum passes, the next Legislature should fix this mess by reversing the elimination of itemized deductions and lower the top tax rate to no more than 8.5 percent. I do not expect that to happen. They will likely follow the pattern from the past. They will meet in private at the last minute before the legislative session ends and pass another poorly designed tax change.

Albert A. DiMillo Jr. of South Portland is a retired corporate tax director and CPA with more than 30 years of tax experience.