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Sarah Austin is the director of policy and research at the Maine Center for Economic Policy.
Many Maine families and small businesses are struggling to overcome the economic upheaval caused by the pandemic. But for wealthy Mainers and large corporations the story is very different. The income of the 30 highest earning Mainers in 2020 nearly doubled that of the top 30 in 2019. At the same time, corporations are raking in record profits unseen since the 1950s — and bragging to investors about taking advantage of the pandemic to raise prices on customers and pad profits.
This boon for corporations and people with wealth, combined with a record-breaking tourist season, rising wages for workers and increased spending by households that benefited from federal policies such as the child tax credit and stimulus payments, have all translated into higher revenues from corporate, sales and personal income taxes.
Maine state revenue is now expected to increase by $822 million more than previously projected to the middle of 2023. Early next year, the governor and Legislature will decide how to adjust the state budget to account for these additional resources.
Policies that get cash in the hands of the households that need it most have been central to reducing economic harm and fueling a faster recovery. Maine lawmakers, following the commitment of the governor, should use this moment to boost incomes of the people struggling most with higher costs, particularly seniors and households with low income, the latter of which, due to systemic racism, are disproportionately Black, brown and Indigenous. And by strengthening our public supports, policymakers can empower more Mainers to balance work, parenting and the impacts of COVID-19.
In addition to increased spending, throughout the pandemic that spending has shifted to goods that are more likely to be taxed — for example, fewer untaxed haircuts and movie tickets and more taxed streaming services and appliances. The result is that Mainers are paying more in sales taxes. This increase makes up about half of the $800 million surplus.
Lawmakers can expand the state’s sales tax rebate to reach more families and deliver larger payments to help more seniors and households with low incomes afford rising prices of goods and fuels. Additional reforms to boost Maine’s earned income tax credit and make the state’s child tax credit refundable could put even more money in the pockets of working Mainers and parents.
Amid the ongoing pandemic, too many workers are facing impossible choices. The Maine Center for Economic Policy’s 2021 State of Working Maine report found that “between April and December 2020, two-thirds of Mainers who had to take time off to care for themselves or a family member with COVID-19 did so using unpaid leave, while another 8 percent received only partial pay while on leave.”
Some of the more than $800 million in state revenues should be used to get the ball rolling on a paid family leave program for Maine. Whether the startup costs for a payroll-funded paid family medical leave system, or a program directly supported by the state’s general fund, this robust revenue presents an opportunity — and a choice — to solve a problem for workers that has only gotten worse during the pandemic.
Additional investments in affordable housing, child care and student debt relief should be considered to ease the burden preventing too many families from reaching financial security and climbing the economic ladder. Policies that expand availability of affordable housing, increase wages for childcare workers and lower costs for parents and forgive student debt and lower college costs will all help improve the lives of Maine families.
We are living through the recovery of an economy built on a foundation of inequality. Unless we choose to make better policy decisions that intentionally support the recovery and fund the brightest future for the Mainers who face significant hardships and barriers, our foundation will only become more uneven as the gains of the wealthiest households and corporations outpace the rest of us.