Gov. Paul LePage recently introduced the Conformity and Family Tax Relief Act, or, simply put, Maine’s formal tax conformity bill. Fundamentally, this bill would adapt Maine’s tax code to align with the recently reformed federal tax code. Contrary to negative media coverage, this is a step in the right direction for Mainers.
Maine’s tax code is outdated and hasn’t been substantially updated in years. And after the federal tax bill cut taxes for the average Maine family by roughly $2,200, it’s time for Maine’s state taxes to follow suit.
LePage’s proposed legislation will make substantial changes to both individual and corporate income taxes. For individual income taxes, the bill would create a new zero percent tax bracket for the first $4,150 of income earned for individuals and $8,300 for joint filers. Additionally, it would raise the standard deduction to match the federal deduction of $12,000 for single filers and $24,000 for joint filers. And for Mainers with families, the bill creates a new child and dependent tax credit that many other states already have on their books.
For Maine’s employers, LePage’s proposal will conform to the federal tax code’s new provision that enables business owners to fully expense their business investments and immediately deduct 100 percent of the purchase. This is wonderful news for Maine’s job creators. They will now be able to make much-needed investments in their business without having to delay or draw out when they can expense them. Even the Tax Foundation called this element “one of the most pro-growth” parts of the bill.
Currently, Maine has one of the highest corporate tax rates in the country at 8.93 percent. That puts us on par with states like California, which certainly isn’t known for its business-friendly policies. The governor’s proposed legislation will cut the corporate tax rate down to 8.33 percent, equating to a nearly $20 million tax cut over the next two years. This tax cut will allow Maine to be more competitive with its neighboring states.
Most importantly, the bill would cut state taxes by $111 million over the next two years. How can you oppose tax relief for job creators and employees?
If you still doubt whether tax cuts have benefited businesses, the benefits of the recent federal tax cuts are already evident in Maine. Many small and large businesses throughout the Pine Tree State have already used tax savings to invest in their businesses and employees. Last month, Everett J. Prescott Inc. announced that bonuses will be distributed to more than 300 employees.
Conforming Maine’s tax code to the federal tax code will also make for an easier time when tax filing season occurs. Maine’s job creators won’t have to abide by two separate tax codes with fears of not fully complying with both.
While some have called tax conformity “ boring” or even “ wishful thinking,” I applaud the governor’s efforts to reduce Mainers’ tax burden. Tax conformity is the right step, and I urge my fellow legislators to vote for this bill.
Beth O’Connor represents House District 5. She is an associate director of Maine Taxpayers United.
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