Mainers could get some immediate relief under congressional Republicans’ tax bills, but down the road lower- and middle-income households may shoulder the burden to pay for the tax cuts, which the Congressional Budget Office said will increase the deficit by $1.5 trillion over the next decade.
House Republicans said their bill would pay for itself, and U.S. Rep. Bruce Poliquin said Tuesday that he will vote for it.
But U.S. Rep. Chellie Pingree said she won’t. She and policy analyst Sarah Austin of the left-leaning Maine Center for Economic Policy said in a roundtable discussion in Portland on Monday that the bill will be paid for by forthcoming cuts to Medicare and Medicaid benefits used by many elderly and low-income residents and the Pell student-loan program for low- to middle-class Mainers.
“The premise to this [House bill] is trickle-down economics, where the corporations will hire more and the rich people will spend more,” Pingree said in an interview with the BDN.
Pingree and Austin said the tax plan’s real intent is the corporate tax cut, which would decrease to 20 percent from the current 35 percent.
“Everything else is window dressing,” Austin said. “Across the board foreign investors will receive more in tax breaks than the bottom 60 percent of Americans,” or those who make less than $65,000 per year. “This is not for the middle class. In a big picture sense this is a huge missed opportunity for the middle class in Maine.”
However, U.S. Sen. Susan Collins lauded the corporate tax cut at an event with Ivanka Trump last Friday in Biddeford.
“We want jobs created here in America, and that’s why we’re lowering the corporate rate, so we’re more competitive with other countries. It is vital to economic growth and job creation,” she said.
House and Senate Republicans have each positioned their respective bills as a break for middle-class Americans. They would, for example, double the standard deduction to $12,000 for individuals and $24,000 for couples and make income tax filing easier for the average American.
In the short term, the Senate budget plan would cut taxes for eight in nine Mainers and the House eight in 11, Austin said. About 9 percent of Mainers would see their taxes rise.
But savings for many Mainers would be small compared to wealthier states such as California and Massachusetts, Austin said.
“Only about 28 percent of Mainers take itemized deductions,” she said. “And the average tax break from the House is about $730.”
In 2015, Mainers filed 645,700 federal tax returns, and 178,870 itemized their deduction. Nearly all claimed a state or local tax deduction, both of which would be repealed in the GOP bills, while 77 percent claimed a mortgage interest deduction, also targeted under the bills for owners and buyers of second homes.
While both the House and Senate bills would eventually repeal the estate tax, which Collins has said she’d like to keep, fewer than 20 people a year in Maine pay that tax, Austin said.
The right-leaning Maine Heritage Policy Center declined to comment, saying it wanted to wait until the House and Senate finalized a bill.
The House plans to start debating its plan Thursday, and the Senate its bill sometime next week. If each chamber approves a plan, they then will try to iron out any differences.
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