Mainers deserve a fair tax code

By Walter Kumiega, Special to the BDN
Posted May 22, 2013, at 11:15 a.m.

Why in the world is Maine balancing its budget on the backs of those who can least afford it? Maine has been doing this for years. It’s time to reduce taxes for these people and ask those who earn more to pay an equal rate.

Maine’s broken tax system lacks basic fairness. Low- and middle-income families pay 17 and 11 cents per dollar of income in state and local taxes, respectively. Top earners, meanwhile, pay just 10 cents per dollar, according to Maine Revenue Services.

To put this in more human terms, a single mother earning minimum wage pays a much larger portion of her income in state and local taxes than someone who makes $1 million a year.

Maine must right this wrong. The prosperity of our middle class and our state’s economy depend on it.

When we think about tax fairness in Maine, we should look at the total percentage of a person’s income that he or she pays to state and local government each year. Too many people make the mistake of thinking that low-income working families have it easier because their income taxes are lower than those who earn more.

But every Maine resident actually pays several different kinds of taxes every year: income, sales, excise, property, use and more. When you tally up all of those payments, middle- and low-income people end up paying a far larger share of what they earn each year than their wealthier counterparts.

The “Buffett Rule” introduced by House Majority Leader Seth Berry of Bowdoinham offers a solution. The bill follows the principle laid out in Warren Buffet’s famous “Buffet Rule”: He should not be paying less in taxes than his secretary.

The proposal asks those making at least $350,000 to pay on average one more penny per dollar of income than they are now. This would generate about $200 million in new revenue that would first go toward filling about half the budget gap caused by Republican tax breaks largely for the wealthy. Starting 2016, the revenue would go toward tax cuts for middle-class and working families. The average tax cut would be $150.

Equalizing the state’s tax code through a “Buffet Rule” would boost Maine’s economy by putting more money in the pockets of middle-class and working families who would spend that money at local businesses.

The bill would be a big step toward a world where Mainers pay roughly the same overall tax rate. It stands in stark contrast to Gov. Paul LePage’s budget proposal, which would gut the circuit breaker program and homestead exemption and eliminate revenue sharing, which has been helping cities and towns afford basic services like road repair and firefighting for 80 years.

Mainers’ property taxes would end up rising by $425 million, and the tax system would become even more unfair than it has been. Middle- and low-income families would pay more than they ever have before, and seniors on fixed incomes would have to pay even more of their Social Security money in taxes.

When you consider all the elements of the governor’s tax shift, the typical Maine family would see a tax hike of $650, according to figures from the Maine Center for Economic Policy.

This is the opposite of what we should be doing in such a fragile economy. We need to reject and replace the governor’s proposal with a budget that embraces tax fairness.

Berry’s Buffett Rule is the best option for Maine. Lawmakers have a chance to write a tax code that grows the state’s economy and is fair to all Maine people. We should seize this opportunity to do right by those who elected us and pass this bill as soon as possible.

Rep. Walter Kumiega, D-Deer Isle, is serving his second term in the Legislature and is House chairman of the Joint Standing Committee on Marine Resources.

http://bangordailynews.com/2013/05/22/opinion/contributors/mainers-deserve-a-fair-tax-code/ printed on October 21, 2014