Every April, Mainers across the state scramble to gather their W-2s, mortgage statements and old receipts in an effort to file their taxes before the deadline. Sure as the snow melts and we enter mud season, the time to file our taxes is here. This year is no different, but in the Legislature, tax season couldn’t have come at a more relevant time.
Over the past few years, we’ve intentionally created a tax system designed to benefit working families and Maine businesses, that invest in our people and our state. Although our economy is recovering, albeit at much slower pace than our New England neighbors, Maine families are still feeling the pressure. Rising costs of everything from child care and higher education to health care and property taxes are putting Mainers in tough economic positions. Even small businesses, which are trying to do right by their workers, are struggling to compete with large multinational companies. So when we make changes to our tax code, we’ve always done so with the intent of putting more money in the pockets of those families and those businesses. It’s only fair.
With the Republican overhaul of the tax code at the federal level last year, Maine lawmakers must confront updating our system — “conforming” to the federal tax code. If we don’t act, these changes threaten to raise taxes on the average Maine family by $300, which is completely unacceptable.
But like most things concerning taxes, it isn’t simple. While Republicans, Democrats and even Gov. Paul LePage agree that something must be done to fix this mess, the difference is in where our priorities lie and who we are looking out for.
The real question is, does the Legislature go through with the wholesale acceptance of a tax plan rife with corporate giveaways and tax breaks for the wealthy, or should we continue our legacy of fighting for fair tax deals that work for all Mainers?
For us, the answer is simple. We need an economy that works for everyone, not just those at the top. Any effort to rewrite the tax code should benefit Maine seniors, working families and small businesses — just like we’ve always done.
We’ve currently got two proposals in front of us. While the proposal from LePage is framed as simple conformity with federal law, it actually goes much further than routine and technical updates to Maine’s own tax code. The LePage tax bill costs $88 million over the remainder of the current two-year budget cycle, and $115 million over the next biennium. It irresponsibly raids state coffers at a time we are seeing a systemic breakdown across nearly every department. The governor’s proposal prioritizes tax breaks for the very businesses and wealthy families that have already benefited from generous federal tax cuts and offers little to hard-working low- and moderate-income Mainers.
For example, the Republican plan doubles the amount of tax-free inheritance from $11.2 million to $22 million. There are only about 20 Maine families who qualify for this type of break.
Our plan is much different. Democrats presented an amended plan that not only rejects massive changes to the state’s estate tax and corporate cuts, but also provides property tax relief, strengthens family-focused tax credits and supports small businesses. The plan expands the Property Tax Fairness Credit by $35 million, increases the Earned Income Tax Credit to 15 percent of the federal rate and creates a tax credit program for businesses offering paid family leave.
It’s a fair deal. Instead of just talking about making life a little easier for Maine families and Maine businesses, Democrats have plan that can actually make it happen.
Equally as important as what our plan expands is what it rejects. Our plan rejects a provision that would be harmful not just to Maine families, but Maine’s small businesses. It would reward out-of-state companies over Maine small businesses actively investing in our state and our people.
As we discuss making any major changes to our tax code, we must consider the entire fiscal picture. We have received an updated revenue forecast that projects Maine’s general fund surplus to be about $128.5 million in the current budget cycle. That’s great news, but not if our families and our small businesses continue to struggle. Our fiscal health is only as meaningful as the health and well-being of our people. Right now, we are facing a devastating opioid epidemic, a significant number of children living in deep poverty and an economy that needs our attention.
Democrats will only support a tax conformity package that will grow and strengthen the middle class, while addressing the significant challenges facing our state. At the heart of it, Maine is all about valuing our working families, our seniors and small businesses. Our tax code should be, too.
Sara Gideon of Freeport is the Speaker of the Maine House of Representatives. Troy Jackson of Allagash is the Senate Democratic Leader.
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