Participants displayed a wild disparity of viewpoints on and interpretations of the controversial tax reform bill, at a contentious May 13 debate hosted by the Wiscasset Republicans at Wiscasset High School.
Maine voters will decide the fate of LD 1495, signed into law on June 12, 2009, in a referendum election June 8. Question One for the referendum reads, “Do you want to reject the new law that lowers Maine’s income tax and replaces that revenue by making changes to the sales tax?”
The bill increases taxes on some categories of purchases, including meals and lodging, and adds taxes to others, including “installation, repair or maintenance services” like auto repair labor. Proponents say it will lower income taxes and shift a larger percentage of the tax burden to tourists. Opponents say the bill hurts lower and middle class Mainers and senior citizens and insist any benefits will be minimal.
House Majority Leader and LD 1495 sponsor Rep. John Piotti (D-Unity) and Larry Benoit of Portland’s Bernstein Shur Government Solutions, a former Chief of Staff for Gov. Baldacci, represented the bill’s proponents – the No on 1 side. Sen. David Trahan (R-Waldoboro) and Albert DiMillo, a CPA from South Portland, represented the Yes on 1 side. A. Jay Higgins, Statehouse Bureau Chief for the Maine Public Broadcasting Network, moderated the debate.
Piotti and DiMillo agreed that it would take much longer than the alternating, five-minute increments allotted to each speaker to fully educate attendees about the bill. Beyond that acknowledgement, however, the sides found little common ground.
Piotti spoke first, detailing the bill’s background. In 2006, Piotti served as House Chair of the state legislature’s Committee on Taxation. Back then, he said, efforts toward a tax reform bill were bipartisan, but somewhere along the way that cooperation broke down. Now almost all Republicans oppose the bill. Nonetheless, he said, LD 1495 is “truly a middle of the road bill.”
DiMillo, a self-described “lifelong Democrat,” crossed party lines to mock Piotti’s conclusion. The bill, he said, is “ridiculous. It does nothing.”
“It’s not fairly distributed,” DiMillo continued. “This is a giveaway to the rich. [Piotti] is a liar.”
DiMillo, by far the most emotional speaker of the panel, played to the crowd throughout, shouting and gesticulating wildly, often drawing laughter or grateful applause. In his opening statement, he also drew a warning from Higgins after repeatedly referring to Piotti as a “liar.”
“Passions do run high on this issue,” Higgins said.
Piotti suggested that the bill’s enemies used the personal attacks to distract from the issues at hand. “There’s been a lot of character assassination,” he said. “You witnessed some here.”
DiMillo questioned the ability of the law to withstand the scrutiny of the courts. “It is blatantly unconstitutional,” he said. “You cannot tax out-of-staters differently than you tax residents.” Benoit pointed out that Maine Attorney General Janet Mills “was consulted” and didn’t find the law problematic, but DiMillo said Mills has “no experience” in tax law. Piotti replied that, regardless of Mills’ own experience, she “has a team behind her including several individuals with extensive experience in tax policy.”
“This is not a matter of sticking it to people from away,” said Piotti.
Piotti said that, under the new bill, most Mainers will see a significant drop in income tax rates, from 8.5 to 6.5 percent for incomes under $250,000 and from 8.5 to 6.85 percent for incomes above that level. “Every income group will pay the same proportion of taxes” as they do under the current system, he said.
DiMillo and Trahan disagreed. “The folks that really benefit from this… are the wealthiest people in Maine,” DiMillo said, and Trahan argued that the bill “slices the Achilles’ heel” of small business.
No one disputed the fact that Maine has suffered financially during the current recession. Piotti said the bill, by taxing “things that are counter-cyclical,” or, in other words, services that residents use regardless of market changes, will prepare the state for economic volatility in the future.
Piotti explained that a large percentage of the sales tax Maine collects comes from new auto purchases. During a recession, these purchases slow dramatically as consumers choose to fix their old vehicles instead – the labor for which would be taxed under the new law.
Increasingly throughout the debate, the audience greeted Piotti’s statements with loud, sarcastic comments, boos and derisive laughter, while Trahan and DiMillo received several rounds of applause. Piotti was good-humored, joking with the crowd despite the cold reception, but he pleaded with them not to allow partisanship to color their view of a complex, important issue.
It’s this very complexity that bothers Trahan. The bill would replace the current system of itemized deductions with various credits, credits Trahan believes will disappear over time. “It depends on the whims of the legislature,” he said.
Trahan wants tax relief, he said, but not like this, he said.
“As a Republican, as a citizen of Maine, I think a tax cut should be a tax cut,” he said. He encouraged voters to take their desire for reform to the polls in November and oust majority Democrats.
In closing arguments, the comparatively soft-spoken Benoit told the audience that “JFK and Reagan” both made tax cuts to deliver the nation through “very difficult times.” Likewise, he said, this cut is necessary to deal with a “marginal income tax rate” that is “way too high.” Doing so, he said, will attract investors and help keep young people in Maine.
DiMillo was curt with his own assessment. “It’s great for philosophers to say things. You need to put numbers on paper… This is a horrendous bill and everyone should vote to get rid of it.”
For more information on the No on 1 campaign, visit www.nohighertaxes.com. For Yes on 1, e-mail yestoreject@gmail.com. For the undecided, the Maine Revenue Services website offers a downloadable tax calculator that allows voters “to see the potential impact of the tax reform.”
The calculator is available at www.state.me.us/revenue/incomeestate/1040/taxreformindividual.htm.