The May 24 Bangor Daily News editorial “Does Corporate Welfare Pay?” is a thinly veiled political attack which could leave Maine residents and families vulnerable.
The piece claimed that Maine gives out $6.6 billion in corporate welfare tax breaks to businesses every two years.This is a misstatement, which the paper later clarified. Read the state’s 2009 report at www.state.me.us/revenue/research/tax_expenditure_report_09.pdf. It was produced by the previous Legislature’s Democratically controlled Tax Committee.
A cursory glance at the report shows that many of the tax expenditures are for staple products necessary for the very survival of Maine’s residents.
Take, for example, the nearly $160 million in sales tax not collected on “grocery staples” or the $16 million in “residential water” taxes the report includes as part of its tax expenditures. These are but two of hundreds of examples of products purchased by individuals that are not taxed by the state of
Maine. In fact, the report itself identifies “necessity of life” for the “grocery staples” and “residential water” exemptions.
Just scratching the surface of this report shows many other exemptions on products Maine people depend upon: diabetic supplies, medical insurance, residential electricity, health care expenditures and on and on.
A tabulation of expenditures targeted for Maine people with low income receiving Medicare, Social
Security or disability benefits totals almost $500 million. These individuals are not corporations and these exemptions are not corporate welfare.
There are more examples of how misleading the editorial was. The report identifies more than $1.5 billion in goods and services purchased by Maine residents or nonprofits that Maine does not impose a sales tax on. To identify purchases made by our libraries or hospitals as corporate welfare is absurd.
To claim that the $300 million expenditure reported because state and local governments do not pay sales tax to themselves is “corporate welfare” is a breach of the public trust.
The report the BDN cited shows just over 10 percent or about $700 million in business transactions that the state had not yet found a way to tax. The remaining nearly $6 billion in tax breaks benefits Maine people and nonprofits.
Among these $700 million in “business tax breaks and reductions” are sales tax exemptions on products used by farmers, baits used by fisherman, credits for delivery of quality child care and electricity consumed by manufacturers that employ Maine people.
Many of Maine’s business tax expenditures are targeted toward small businesses. The owners of these businesses are our friends and neighbors — they are paying their share of taxes. The underlying truth of this report is that state government has found a way to tax virtually all aspects of doing business in Maine except the tax breaks illustrated in this report.
There is a responsibility for government to oversee these expenditures, but to present an entire universe of tax exemptions for Maine people and small businesses as some sort of handout is wrong.
A Maine resident not paying tax when they fill a glass of water from their faucet, purchase groceries, medicine or energy is not receiving corporate welfare.
But here is the kicker: One example of these so-called corporate welfare tax breaks is a tax reduction for the BDN themselves.
The Bangor Daily News and the other members of Maine’s newspaper industry receive almost
$9 million in corporate welfare through Maine law, 36 M.R.S.A. § 1760.14, and the reason for the
sales tax exemption is subsidize the purchase of “any publication regularly issued.”
This is not to mention the more than a million received by Maine’s newspapers through the form of advertisements paid for by the taxpayers, advertisements for which the newspaper industry is currently lobbying in Augusta to keep in these tough times.
For the record, we are not suggesting a sales tax on newspapers should be imposed, or that it is somehow “corporate welfare.” However, with this misleading editorial, the BDN is doing just that.
Jason Savage is executive director of Maine People Before Politics, www.MainePeopleBeforePolitics.com.