The debate over tax reform in Maine rages on, despite the adoption of sweeping tax code changes last month that split the Legislature along party lines.
The bill, which enjoyed an 84-61 majority in the House and a 20-13 vote in the Senate, is now the subject of a citizen’s petition that seeks to derail it.
In a year when Republicans and Democrats were able to agree on the majority of issues, the debate over tax reform in the end emerged as sharply partisan. Only one Republican lawmaker, Sen. Peter Mills (R-Cornville), voted in favor of it.
“If someone wants to spend 10 minutes listening to me, I can explain my vote,” said Mills. “It should have been an economic development issue.”
But the majority of Republicans see the measure as confusing, ineffective and abhorrent because it expands and increases the collection of sales and food and lodging taxes.
Sen. David Trahan (R-Waldoboro), one of the bill’s more outspoken critics, has become the point person in an effort to force a repeal of the bill. Trahan and a group of like-minded individuals will attempt to gather the more than 55,000 signatures of registered Maine voters that are required to put a question on a statewide ballot.
“I’ve had a bad taste in my mouth since this bill was introduced about the process and what the bill actually does,” Trahan said. “I do support the income tax being cut. I just don’t like the way it’s done in this bill.”
The bill reduces the state’s top income tax rate from 8.5 percent to 6.5 percent, provides breaks for lower-income earners and imposes a surcharge on taxpayers who earn more than $250,000 per year.
To balance that lost revenue, it increases the tax rate on a variety of goods and services, in some cases to areas that weren’t taxed before. While Democratic supporters argue that the bill brings Maine’s tax rates more in line with surrounding states and will save Mainers some $57 million because it “exports” some of the tax burden to visitors, Republicans say the bill is deceptive and confusing.
“The sales tax expansion is being promoted as a save-all,” said Trahan. “It nickels and dimes people through the sales tax, and still their pockets are empty.”
House Minority Leader Joshua Tardy argues that at least 85,000 Maine families will see a tax increase as a result of the bill. He also criticizes the fact that the bill was introduced by Gov. John Baldacci in the waning hours of the legislative session, giving lawmakers little time to review it before voting.
Baldacci presented his bill, which is largely based on a bill written by the Legislature’s Taxation Committee, as a replacement that included provisions he could support.
“The 33-page tome was dropped on Legislators’ desks only minutes before the vote was ordered,” said Tardy in a prepared statement.
House Majority Leader John Piotti (D-Unity) has been the initiative’s most vocal supporter. He said he’s disappointed that the debate has become so partisan.
Piotti said petition organizers aren’t likely to collect enough signatures in time to put a question on the November ballot, which means it might land on the June 2010 ballot – six months after the legislation takes effect. Piotti said that would cost Mainers money and send a negative message to businesses considering expanding here.
“We’re going to lose a lot of potential momentum just when we need it as a state trying to come out of an economic slump,” Piotti said. “The timing of this would be deadly to the people of Maine … signing this petition essentially puts Maine at risk.”
Piotti said he suspects Republicans are trying to rally their conservative base in advance of the 2010 election.
“They have become the party of saying ‘no,'” said Piotti. “The don’t offer other alternatives.”
Trahan, who has launched a political action committee called “Still Fed Up With Taxes” for fundraising purposes, said this week he and others are in fact working on an alternative, but wasn’t yet prepared to discuss the details.
“It’s a lot of work to get 60,000 signatures,” Trahan said. “If the people don’t support this, they’ll say so at the polls.”