PALMYRA, Maine — The defeat of a tax reform package at the polls last month was either an indication that voters recognize a ruse when they see one or proof that the Yes on 1 camp successfully distorted the issue. It depends whom you believe, and in this debate, your choices are the Republicans or the Democrats.
Sixty percent of the roughly 318,000 people who voted on the issue June 8 clearly found more flaws than attributes in the bill, which was enacted almost exclusively by Democrats in the Legislature last year. About 60 Republicans and other supporters of the repeal who gathered Thursday at Millennium in Palmyra for a drinks-and-appetizers “victory party” characterized the package as an attempt by Democrats to increase taxes, not reform them.
“This vote was a significant rebuke of the majority party’s belief that they know what’s best for the people of Maine,” said Rep. Josh Tardy, R-Newport, the minority leader in the House of Representatives. “The Democrats aren’t for tax reform. They’re for tax change.”
The tax reform bill would have reduced the top income tax rate from 8.5 percent to 6.5 percent, a cut that Democrats said would be felt by every person and business earning less than $250,000 a year. To accomplish that without slashing revenues, the plan expanded the items and services subject to the sales tax and increased the meals and lodging tax from 7 percent to 8 percent. Democrats argued that the changes would make tax revenues less prone to fluctuations in the economy, but Republicans countered that it made tax collectors out of legions of Mainers.
Sen. David Trahan, R-Waldoboro, who was one of the leaders of the Yes on 1 campaign, attributed the win to conversations among the working class, such as mechanics who would have had to collect a new tax on auto repairs.
“This was a grass-roots campaign,” said Trahan. “Our opponents outspent us 2-to-1 and had all the major newspapers on their side. This win was just about word-of-mouth.”
Asked whether Republicans have a counterproposal, Trahan and others said they plan to submit tax reform bills in the coming session built around the concept of using excess revenues above the state’s LD 1 spending cap to reduce the income tax rate incrementally until it reaches 4.5 percent.
But Democrats such as Sen. Joe Perry, D-Bangor, the Senate chairman of the Legislature’s taxation committee, say that’s an old and tired idea that either won’t work at all or would take decades to bring results.
“It sounds good, but that’s more ‘do nothing,’” said Perry on Thursday. “It could be more than a decade before we see a nickel of surplus revenue. When we do see some surplus revenue, if that’s the place we decide it will go, we’re also deciding we’ll never see 55 percent funding for education. That puts tremendous pressure on the property tax. It sounds good in campaigns and it sounds good to the public, but it’s just not reality.”
Rep. Thom Watson, D-Bath, the former House chairman of the taxation committee who resigned from the Legislature in May to become an attorney for the state Workers’ Compensation Board, said the Yes on 1 campaign misled Maine voters by focusing on details of the bill instead of the overall concept.
“I just don’t think that we could present what was right about that bill in a 30-second sound bite,” said Watson. “In order to appreciate what a comprehensive piece of legislation does you really need to take quite a bit of time to study it, not rely on the opinions of people who have political motives.”
Curtis Picard, executive director of the Maine Merchants Association, a lobbying group that was instrumental in the repeal effort, dismissed that claim. He said his organization became involved because its members were in an uproar.
“A lot of our members would have taken it on the chin under this proposal,” said Picard. “That kind of made it an easy decision that it was our time to step in.”
In addition to being a victory party, Thursday’s event was a fundraiser to cover more than $12,000 in debt still on the books for the Still Fed Up With Taxes PAC.
“We’ll raise the money to cover that,” said Charlie Webster, chairman of the Maine Republican Party, as he counted cash and checks collected from the event’s participants. “We don’t have deep pockets, but we’ll raise it.”