Serious economists agree that fair, affordable tax policies are needed to produce jobs, surpluses and a strong middle class. Yet like the Bush cuts of 2001, the LePage tax shifts of the last two years are taking Maine dramatically in the wrong direction.
That is why I was disappointed to see my friend and colleague, Sen. Roger Katz, R-Augusta, baselessly attacking Democrats for “selective amnesia” regarding the massive, overall tax shift enacted recently at the State House.
Sen. Katz mentions cuts to income taxes, but that only tells part of the story. An excellent lawyer, he selectively describes the impact of one tax measure, yet forgets the impact of more than 50 other tax bills he helped enact. As any Mainer knows, you don’t measure a forest by describing a single pine.
So here is the big picture: Maine’s middle class and working families are in for a world of hurt, while a select few are in for a major new tax windfall.
According to Maine Revenue Services, when you look at all state and local taxes (income tax, sales tax, property tax, etc.) a single, minimum-wage parent making $12,000 a year pays 17 cents on each dollar, while someone making more than $350,000 a year pays 10 cents on each dollar.
In other words, the single parent pays nearly twice the overall, state and local tax rate paid by those making hundreds of thousands a year or more.
This is neither the American way nor the Maine way. In the town where I grew up, we think people should pitch in according to their ability. We don’t wait for our neighbor to stack two hay bales every time we stack one. If we did, we’d never get our hay in.
Yet thanks to failed, trickle-down policies first in Washington and now in Augusta, the economic shift is getting even worse. Due to the many tax measures passed by the 125th Legislature by the majority, the few making $350,000 and up will receive an income tax cut of $3,000 next year. In future years, this windfall will increase to over $24,000 per year.
In contrast, the single parent and tens of thousands of similar Maine households will receive an annual income tax cut of $8 a year, growing in future years to less than $9. At the same time, they will receive a property tax increase starting in the hundreds.
Because middle-class and working families typically put their equity into their home, they are especially hard hit by this unfair shift to property taxes.
The shift is real, is growing, and was passed over the objections of Maine towns, cities and schools. Enacting over 50 tax-related bills in all, the GOP-controlled Augusta has so far paid for just over a tenth of the total long-term tax cuts it has set in motion. The rest, like a mortgage paid by credit card, has been left to future leaders and taxpayers.
Of the fraction actually paid for, $150 million over two years, more than two-thirds was shifted away from funding for Maine towns and property tax refunds. Though it has only begun, the “largest tax shift in Maine history” has already cost thousands of Maine homeowners and renters more than $400 apiece. Maine’s families, schools and towns can expect a far greater pinch as the future payments come due.
At every turn, Democrats offered alternatives that were rejected. For instance, every House Republican present voted against my compromise plan for the biennial budget: give tax cuts to 16,000 more Maine families overall, while reducing the top-earner tax cuts. The compromise involved no new taxes or costs, and would have helped every Mainer by restoring funding to towns and to property tax and rent reductions.
The largest tax shift in Maine history will benefit a handful in the short run, while hurting us all in the long run. In 2013 it is my hope that we can restore balance, put partisanship aside and focus instead on measures that restore economic equality and strength to the state we call home.
Rep. Seth Berry, D-Bowdoinham, is the lead Democrat on the Taxation Committee. He represents Bowdoin, Bowdoinham, Richmond and the Unorganized Territory of Perkins Township.