Conservatives, liberals spar over causes of Maine’s income gap

Posted Nov. 18, 2012, at 7:38 p.m.

AUGUSTA, Maine — A new study released last week shows that while the income gap between the rich and poor hasn’t grown as much in Maine as it has in other states, the poorest 20 percent haven’t seen their financial situations change notably in two decades.

Garrett Martin, executive director of the liberal-leaning Maine Center for Economic Policy, said the study should serve as a notice to Maine’s new legislators that they should abandon some of the policy changes that have been enacted under the Republican-controlled Legislature in the past couple of years such as tax reductions for the wealthy and cuts to social services. But Republicans said their ideas are designed to do exactly what Martin and the study call for.

The report, “Pulling Apart: A State-by-State Analysis of Income Trends,” compiled by the Center on Budget and Policy Priorities and the Economic Policy Institute, was released in cooperation with the Maine Center for Economic Policy. The study, which tracked incomes from the 1990s through the mid-2000s, found that low- and moderate-income families saw little improvement in their financial status despite a long period of economic expansion during the study’s focus period.

While the richest 20 percent of Mainers saw their incomes grow by about 6.4 percent in that time period, the poorest 20 percent saw no financial growth at all, according to the study. It further found that in the late 1990s, the richest households had incomes 5.9 times as large as the poorest 20 percent. By about 2005 that number had grown to 6.3 percent.

Still, the problem in Maine is not as pronounced as it is elsewhere. Nationwide, incomes dropped almost 6 percent among the bottom fifth of households while rising about 8.6 percent in the top-earning fifth. Since the 1970s, incomes for the poorest 20 percent have risen by 27 percent while their rich counterparts’ incomes have jumped by more than 66 percent.

“As Maine’s policy makers prepare for the coming legislative session, their agenda should include policies that narrow — rather than widen — the income gaps between rich and poor in our state,” said Martin in a press release. “Maine’s safety net providing temporary assistance to families when they need it most, coupled with critical investments over the past 30 years in education and in health care, have resulted in inequality growing slower here than in other states. But make no mistake: Maine still has a growing gap between rich and poor and recent policy decisions will make it worse.”

Among the decisions cited by Martin were tax cuts for the wealthy, the reduction of property tax relief programs and the partial dismantling of so-called “safety net” social services. Martin said the result has been a shifting of costs for roads, education and other services onto low- and middle-income families.

Jason Savage, executive director of a conservative organization called Maine People Before Politics, said in a written statement to the Bangor Daily News that Republicans and Gov. Paul LePage worked together in the most recent legislative session to cut taxes for thousands of Mainers, including some who have lower incomes.

“There is no better or more direct way to guarantee Maine families with lower incomes have more money in their pockets to spend as they, not any government or bureaucracy, see fit than reducing or eliminating their tax burden,” said Savage.

Brent Littlefield, who is LePage’s political adviser, spoke to the Bangor Daily News Friday outside of that role and rather as a long-time conservative political commentator. He said a fact ignored by the study is that LePage and the Legislature’s current biennial budget eliminates state income taxes for some 70,000 of Maine’s poorest people.

“The intent is to give people a hand up to help them,” said Littlefield. “They might not really even realize that their taxes are being cut, but they’ll see it [next year] when they get a full refund. It was a conscious effort to try to help people at the lowest income levels. It was the largest tax cut in Maine history.”

But according to Martin, that’s not enough.

“Growing up in poverty is harmful to our children, affecting everything from their performance in school to their earnings as adults,” he said. “A fairer state and local tax system and bold new investments in education and training at all levels would enable individuals and families to move up the income ladder.”

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