Special Session for Tax Reform Looks Likely
I'm not sure what "key elements" of the proposal legislative leaders must find consensus on, but it looks like LD 1595 will be back this fall.
Ernie Marriner, chairman of the Tax Reform Committee at the Maine Chapter of the American Association of Retired Persons, said the proposal would bring tax relief to many Maine families.
"LD 1595 lowers income and property taxes for Maine residents - substantially for those who need it most - and pays for it by closing special-interest sales-tax loopholes," Marriner said in a prepared statement. "Our members believe this to be an essential step in assuring a stable revenue stream and protecting vital services."
As proposed, the bill would lower the state sales tax from 5 percent to 4 percent, but would raise taxes in numerous other areas including liquor and restaurant meals. The taxpayers group said the bill would further expand the circuit-breaker property tax relief program and fully fund the Homestead Exemption, which is now only half-funded by the state.
State Rep. Deborah Hutton, D-Bowdoinham and a member of the Legislature's Taxation Committee, supports the tax overhaul claiming Maine's sales tax base is "one of the narrowest in the nation" and is largely responsible for the state's "boom and bust budget cycles." She said the bill would attempt to bring stability to the state's tax structure, which now draws about 30 percent of its revenue from the income tax, 21 percent from the sales tax and 44 percent from the property tax. Leading economists long have recommended revisions that would equalize the burden to one-third for each revenue component.
I've talked to at least one legislator who was reticent to support the bill in June but says the time is right now. This kind of broad-based tax reform has been promised for decades and may finally be close.
Visit the new Maine Politics.
posted by @ 1:24 PM 
27 comments
27 Comments:
By reform, they mean increase.
Posted by George
This comment has been removed by a blog administrator.
"By reform, they mean increase."
I guess reading comprehension isn't your strong suit.
Or you're just a parrot repeating what you have been taught to say.
So sorry that this would mean that LOWER income people would get SIGNIFICANT net tax breaks. I guess that doesn't concern you.
Posted by Xavier
If LD 1595, as it came out of committee in the spring, is passed, the tax revenue collected by the state will increase. That is a fact.
Posted by George
In combination with LD 1, it's revenue neutral. LD 1 does not fully fund the increase in the Homestead Exemption.
Posted by Xavier
AJ Higgins made a mistake in this article. LD 1595 does not lower the sales tax from 5% to 4%. it broadens the base of goods and services that the sales tax applies to and uses that revenue to lower income and property taxes for Maine residents. Maine's sales tax applies to fewer goods and services than most any other state with a sales tax and a good portion of it is paid by out of staters- remember, we're vactionland. This means tourists will pay a greater share and Mainer's will see a net lowering of their total taxes. Most Republican legislators agree with this and are on record supporting the policy. It shows what hypocrites they are to oppose it now that its close to becoming reality.
Posted by Rob
Xavier writes: "In combination with LD 1, it's revenue neutral. LD 1 does not fully fund the increase in the Homestead Exemption."
Very little of the money including in LD 1 goes to tax relief. Most of the increased school aid is being used to increase spending.
Posted by George
This comment has been removed by a blog administrator.
The Homestead Exemption, the Circuit Breaker, the increase in the low income tax credit, the reduced income tax rates... all lower taxes. It lowers them more for the people who most need it.
this is all BESIDES what municipalities decide to do with their increased school aid.
You know, some communities are smart enough to decide how they want to use the money. And why should I in Portland tell the folks in Millinockett, whose experience I have not had, that they shouldn't use their school aid to raise school spending? Perhaps they know better than I do that they need it to improve their economy.
so you have two pieces - lower taxes for everyone, but especially those who need it the most, and local control over what to do with the extra school funding. Pretty darn good if you ask me.
And what has the GOP offered as an alternative? Nada, zip, zilch, bupkus and squat.
Posted by Xavier
This comment has been removed by a blog administrator.
The bottom line is that LD 1595 means more revenue to the state than under current law. That is a tax increase.
If people are serious about lowering the tax burden, why not a reform bill that actually reduces government revenue?
Posted by George
Well, since this bill shifts taxes to visitors to our state, it does lower taxes to Mainers.
If people are serious about lowering spending, they would elect different people.
Oh wait, the only difference between Republicans and Democrats these days is that Democrats pay as they go by not cutting taxes, while Republicans spend just as much if not more and BORROW to make ends meet. (see federal and nationwide examples)
Which is more responsible?
If the GOP got control in this state, they would lower taxes for the wealthy, not for everyone, and spend just as much but borrow to pay for it.
no thanks.
Posted by Xavier
The idea that this bill will primarily shift taxes to visitors is political spin. Maine people will pay those higher taxes, too.
As for borrowing: did you miss how the Democrats in Augusta balanced the state budget and what party forced a change in that borrowing plan?
Posted by George
It is not spin to say that an increase in the lodging tax will mostly be paid by people from away. Will there be some Mainers who do? Sure. I like to go to a B&B now and then in another part of the state, but most people paying this are from away.
In terms of some of the things the sales tax is expanded to, it will mostly impact the wealthy. Who is more likely to use architect services and landscapers? The poor or the wealthy?
This bill would also cause the sales tax to be applied to escort services. Is this why you are complaining so much?
And it was hardly the GOP that caused the shift in the budget plan. It was popular opinion. The GOP has given no alternative plans of any kind other than repeating like a broken record "cut spending cut spending cut spending" without giving detailed lists of what they would cut.
You know, be careful what you wish for. Have you seen what is happening in Colorado? They passed a silly TABOR law and now the GOP Governor is running around trying to raise taxes to save the state's ass.
The people of Colorado also decided they no longer wanted a GOP legislature and voted in Dems to deal with the budget mess the GOP got them into.
It's so funny. It used to be the GOP who was known as the party of fiscal responsibility. Now they make MC Hammer look like a fiscal genius.
Posted by Xavier
The borrowing would not have been repealed if not for the petition drive. If not for that effort, the issue would not have stayed in the news and there would have been no vehicle for the expression of public sentiment. Also, when it came time to repeal the borrowing, the GOP did offer a plan that would have done it without tax increases.
The expanded sales tax includes lots of services that the poor and middle class also pay for. We all die, for example, and will end up paying a big tax bill on our funeral if this bill passes. I mow my own lawn, but my elderly neighbor pays someone to do it. She is not wealthy but she will be paying the new tax on landscapping if the bill passes.
But whatever the merits of the tax shifts, if the bill was really about reform, it would not bring in more revenue.
Posted by George
"the GOP did offer a plan that would have done it without tax increases."
Really, what was it? Can I see a copy of it?
"The expanded sales tax includes lots of services that the poor and middle class also pay for. "
But the BRUNT of it is paid for by the wealthy. When you consider the cuts for the poor and middle class on property and income taxes, they get a big net benefit.
"if the bill was really about reform, it would not bring in more revenue"
Depends on your definition of "reform".
If all you see as reform is making sure there are less government services for people who need them, then no, this does not qualify.
If you believe like I and many others do that reform means making a FAIR tax system that is less volatile and based closer on people's ability to pay, then this succeeds in spades.
Posted by Xavier
"Really, what was it? Can I see a copy of it?"
The Republican Members of the Appropriations Committee had to offer their plan as amendments on the floor because the Democrats would not allow a minority report. Probably so people like you could claim they had no plan. You can find the amendments on the legislative website.
"But the BRUNT of it is paid for by the wealthy. When you consider the cuts for the poor and middle class on property and income taxes, they get a big net benefit."
That's the spin but there is no real analysis to support the claim.
"Depends on your definition of "reform"."
I don't think most people define it as more taxes. The proponents certainly don't like to talk about the fact that their bill will result in more revenue for the state.
Posted by George
"That's the spin but there is no real analysis to support the claim."
anyone with half a brain sees how obvious it is. If a low income homeowner now pays $2000 less than last year in property taxes (the increase since last year in the circuit breaker, not even counting the increased amount of the homestead exemption and the increase in the low-income tax credit), but they pay $10 a year in taxes on services, that's not too bad.
"The proponents certainly don't like to talk about the fact that their bill will result in more revenue for the state."
Which is because when combined with the tax breaks in LD 1 (unfunded part of the homestead exemption), this is revenue NEUTRAL. NOT increased revenues.
Give up pal, you are factually wrong.
oh and a few amendments != a plan.
Posted by Xavier
"anyone with half a brain sees how obvious it is. If a low income homeowner now pays $2000 less than last year in property taxes (the increase since last year in the circuit breaker, not even counting the increased amount of the homestead exemption and the increase in the low-income tax credit), but they pay $10 a year in taxes on services, that's not too bad."
Most real low income people don't own real estate and spend every dime that they have to live. They will now be paying more in sales taxes when they get a hair cut or go to the movies. Maybe their landlords will pass along their property tax break, if one actually ever happens, but I doubt it.
By the way -- my property taxes went up this year and I'm not elegible for the circuit breaker. I'm not poor, but I'm certainly not wealthy. Where is my tax break in all this reform?
"Which is because when combined with the tax breaks in LD 1 (unfunded part of the homestead exemption), this is revenue NEUTRAL. NOT increased revenues."
LD 1 is already law. It won't be on the table in a special session. To include something passed in January to make a new proposal revenue neutral is bogus. LD 1595 will increase revenues from the current situation. It is factually wrong to say the bill is revenue neutral. It's not.
"oh and a few amendments != a plan."
They offered an amendment to balance the budget without raising taxes.
Posted by George
Two things I've noticed from George's posts here:
1. He never deviates from the Republican line.
2. He always has to have the last word. He'll keep posting long after the argument has been won or lost or gone stale.
He's like some kind of conservative robot.
Posted by Mike
Mike: Do you ever deviate from the liberal line?
Posted by George
Your question does not compute.
Posted by The MikeBot 3000
The easiest way to get true tax reform support and tax reform the benefits those of us who already pay, in real dollars, more than most wealthy Mainers and most large corporations in based or doing business in Maine, is for the Gov's office to publish the top 500 wealthiest Mainers and the top 100 wealthiest corporations in Maine (spare us the artificial % tax paid from tax tables) and then show also the total Fed and Maine State taxes these folks and corporations paid in taxes! Mmmmm, now that's what gets attention on this issue.
I would love to see, some of our retired, pols who are now multi-millionaires from the influence they gained from their 'public office' days that allowed them to sit to make millions now and who may even sit on the boards of the corporations who pay virtual no taxes.
Mmmmmmm yes I would love to see that, Mike!
Posted by frankieo
"Where is my tax break in all this reform?"
Increase in the Homestead Exemption (part of LD1 but not funded unless LD1595 passes) and you probably benefit from the decreased income tax rates. So there you are.
"Most real low income people don't own real estate and spend every dime that they have to live."
If they don't own real estate then they haven't really been paying the property taxes, huh? And there are thousands upon thousands who do. Especially people who bought property 40-50 years ago and are retired now living on social security. This will allow them to stay in their homes.
And if you are going to bark about poor people paying more in rent, the proposal also increases the rent rebate. So everyone is covered.
"elegible"
it's spelled 'eligible'
And it is perfectly fair to lump two tax reform proposals from the same year together. Since they both address the Homestead Exemption, they really should be considered together. So yes, whether you like it or not, this package is revenue neutral.
Deal with it.
Posted by Xavier
"Most real low income people don't own real estate and spend every dime that they have to live."
I thought I would add that I would wager I know a hell of a lot more about being low-income than you ever will. Having been seriously low-income myself, worked in a homeless shelter, and lived in neighborhoods predominantly low-income most of my adult life I think I know what will benefit them more than a well-off Republican who has no idea how people actually live.
the funny thing is that you say this wouldn't be good for poor people, but what were the GOP proposals? Lower taxes for the wealthy (but not the poor), cut social services that allow poor people to get by, and cut taxes for corporations that don't pay a livable wage.
Nice.
Posted by Xavier
I thought liberals didn't believe in stereotypes?
Posted by George
"I thought liberals didn't believe in stereotypes?"
We're as flawed as anyone else. But at least we admit it.
Posted by Xavier