A better state ‘jobs bill’ would target tax relief for average Mainers, not the wealthy few

By Garrett Martin, Special to the BDN
Posted March 10, 2011, at 8:18 p.m.

When he introduced his proposed budget for the coming biennium, Gov. Paul LePage called it a “jobs bill.” Rigorous scrutiny reveals that it requires huge sacrifices from working families, local governments, children and seniors, retired teachers and state employees, while the lion’s share of its benefits is in the form of massive tax breaks for Maine’s wealthy few.

A true “jobs bill” would target tax relief where it would do the most good by putting more money in the pockets of average families who are more likely to spend it and generate economic activity.

We can better accomplish this through more generous and effective property tax relief and by expanding and making refundable the state earned income tax credit. It would also balance tax cuts with sustained funding for health care, education, infrastructure and other investments that will strengthen economic recovery, fuel growth and create good jobs.

As proposed, this budget gives the wealthiest 1 percent of Maine households, those earning more than $360,000 dollars, an average $2,700 dollar tax cut. But it also reduces benefits by 20 percent under the property tax circuit breaker program that benefits more than 75,000 non-elderly Maine families. A family that receives the maximum benefit will actually see their property tax burden increase by $400 under the governor’s budget.

The governor proposes to double the exemption from the state’s estate tax to $2 million, a $30 million tax cut to benefit around 550 large estates. Coincidentally, the budget’s proposed freeze on health care funding for thousands of working parents and prescription drug assistance for seniors would save approximately $30 million.

The proposed budget slashes cost-of-living increases and undermines financial security for retired Maine teachers and state workers whose pensions average about $18,500 per year. The governor claims that this sacrifice is necessary to balance the state budget, but he proposes $200 million in tax breaks with half of these benefits going to households with annual incomes over $120,000.

The governor’s stated opposition to bond issues would drastically reduce critical investments in Maine’s roads and bridges, schools, technology infrastructure and communities. This will damage Maine’s immediate and long-term economic prospects far more than his proposed tax breaks to the wealthy would accelerate job growth and encourage shared prosperity.

During the campaign, Gov. LePage promised to boost state education funding to the full 55 percent voters approved in 2005. But under his proposed budget, General Purpose Aid to Education from the General Fund will fall approximately $137 million short of that legally mandated goal and will actually be lower in 2013 than it was in 2006.

By cutting revenue sharing and other funding for municipalities and failing to meet the 55 percent threshold for education funding, the governor’s budget will shift costs for basic services to towns and cities and likely to their property taxpayers.

At a time when broad-based property tax relief would do more to boost our economy, the governor instead slashes targeted property tax relief for lower and middle-income Mainers to fund income tax breaks for the wealthy. Businesses and individuals will have to pick up the tab for the costs shifted to them by the governor’s proposed reductions in funding for health care coverage, higher education and infrastructure, eroding rather than improving Maine’s economic prospects.

It’s not too late to deliver a state budget that reflects the priorities and values of Maine families.  We can provide real tax relief to working families, maintain public investments in our people and communities and raise sustainable, predictable revenues without disproportionately benefiting a wealthy few at the expense of everyone else.

If we raise the income levels at which households pay the top state income tax rate, expand the state earned income tax credit and make it refundable, and streamline and expand property tax relief, we will provide real benefits to far more Maine families and do far more to grow Maine’s economy.

Garrett Martin is associate director of the Maine Center for Economic Policy, which recently released “Tax Plan: Winners & Losers,” which is available on its website, www.mecep.org.

http://bangordailynews.com/2011/03/10/opinion/a-better-state-jobs-bill-would-target-tax-relief-for-average-mainers-not-the-wealthy-few/ printed on July 31, 2014