Tax Day in Augusta

Posted April 15, 2009, at 7:33 p.m.

Thursday, not April 15, will be tax day in the Maine Legislature as lawmakers consider a handful of bills that would restrict taxation and spending. By requiring voter approval of tax increases or requiring that new state revenue be devoted to tax relief, proponents of these bills argue that they will put money back into the pockets of hardworking Mainers.

This sounds good but overlooks a fundamental truth: Taxes pay for important government services, often services that the private sector can’t or won’t provide. No one wants to pay taxes, but plenty of people want the services — paved roads, jails, protections for abused children, lakes stocked with fish — that they pay for.

After being told for years that Maine’s tax burden was the highest in the country, last year it was revealed that Maine’s average state and local tax burden in 2008 was 10 percent of income, ranking the state at 15th, according to the Tax Foundation. More important, Maine’s tax burden is only slightly above the national average of 9.7 percent and it is moving downward, as it should be.

This does not mean that Maine’s tax burden is acceptable, but shows that it is not being ignored.

Further, the reality is that state government has been fiscally restrained over the last several years, and general tax increases have been avoided. Gov. Baldacci deserves credit for being the first chief executive in decades actually to reduce state spending. His proposed budget for fiscal years 2010 and 2011 totals $6.1 billion. The 2008-09 budget was $6.3 billion. If spending kept pace with the average increases in recent years, the next biennial budget would have totaled $6.8 billion.

This decline in spending, in fact, would negate many of the bills the Taxation Committee is scheduled to hear Thursday, including the headline legislation, LD 976, a citizen initiative that would restrict state spending and require tax increases to be approved through public votes, dubbed TABOR II.

Complicating the work of the Legislature, other bills, if passed, that deal with taxes and spending could be considered a competing measure and also would have to appear on the November ballot alongside TABOR II.

The Maine State Chamber of Commerce, which has long called for lower taxes, has backed away from TABOR II and praised aspects of another tax relief bill, LD 1080. This bill would lower incomes taxes by extending the state’s sales tax to new items and by increasing the meals and lodging tax, among other changes. It was strongly opposed at a recent public hearing.

Writing in the Chamber’s April 2 newsletter, the group’s president, Dana Connors, said that an amended version of LD 1080, coupled with spending limits, but not TABOR II, would be a good outcome. To make tax reform successful, he wrote, the Chamber would work with the Legislature to draft a competing measure for the November ballot.

While details are scarce, this is an improvement over simply calling for lower taxes and spending restraint.

Mr. Connors ends by writing that tax reform is not easy. That is absolutely true, but trying to reduce taxes through the ballot and artificial spending limits is an attempt to take the easy way out of dealing with a complex situation.

http://bangordailynews.com/2009/04/15/opinion/tax-day-in-augusta/ printed on September 23, 2014