Maine lawmakers kill bill to lower income tax

Posted June 03, 2009, at 10:49 a.m.

AUGUSTA, Maine — Maine lawmakers have killed a bill to lower the state’s income tax rate for individuals and corporations.

By a 20-15 vote, senators on Tuesday turned down the proposal to lower the tax rates from 8½ percent to 4½ percent over three years. The House followed suit, 90-48.

Supporters said the lower rates would restore the state’s economic competitiveness. Opponents said the state government cannot afford the billion-dollar loss in revenues that would result.

The bill sponsored by Republican Sen. Douglas Smith of Dover-Foxcroft is separate from a more far-reaching tax reform bill backed by Democrats on the Taxation Committee. Under that bill, Maine’s sales tax would be broadened to cover new services but held steady at 5 percent, while the top income tax rate would drop from 8.5 percent to 6.5 percent.

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