I was talking to a friend at a convenience store last week. She asked me what I had been up to. “Besides working to pay my taxes,” I said, “I’ve been involved with the “Yes on 1″ campaign.”
“Yes on 1?” she asked. “Well, I’m voting ‘no.’ I don’t want those new taxes, especially the one on car repairs!”
I looked down and shook my head. That was the third time in a week that I talked to someone who had Question 1 backwards.
“Vote ‘yes’ if you want to repeal those taxes,” I told her. “A ‘no’ vote will allow over 100 new taxes including the new one on auto repair labor to go into effect, along with increases in meals and lodging and other taxes.”
The “No on 1’s” misinformation campaign is working. This is intentional confusion on a grand scale, and out-of-state money is helping to fund it.
For example, we’ve all heard the claims that 90 percent of Maine people will see an income tax reduction. That is not the truth. Because this new law removes Maine’s current itemized deduction system and replaces it with credits, Maine Revenue Services predicts that 82,000 Maine families will pay more in taxes right off the bat.
With the loss of income tax indexing, which automatically adjusts taxes to compensate for inflation, the number of losers increases dramatically over the next several years, until 2014 when only Maine’s wealthiest earners will see a tax reduction.
Even worse, Revenue Services estimates that at least 113,000 of the lowest earners in Maine will not file to get their income tax “household credit.” They will, however, have to pay all of the new sales taxes.
We’ve also heard that Maine’s meals tax is low, and we should raise it to get some of those wealthy out-of-state visitors. Again, that is not true.
Maine’s meals tax at the existing 7 percent is not low compared to other states. At the proposed 8.5 percent, it would be among the highest. Massachusetts, for example, just raised its meals tax from 5 percent to 6.25 percent and Connecticut’s tax is only 6 percent. Even the tourist city of Orlando, Fla., has a total sales tax on meals that is only 6.5 percent.
And 70 percent of the sales tax on meals is paid by Mainers. We like to go out to eat, too.
Another fallacious statement is that these new taxes will be mostly exported. Wrong again. The tax expansion includes taxes on auto repair labor, appliance repairs and diaper services, among other things. How many tourists use those services?
And no, the law is not revenue neutral. This tax expansion is about more and steadier revenues to Augusta and always has been. Should the veto fail, we can expect the next expansion soon, and it will likely include taxes on personal services such as haircuts and taxes to real property such as carpenters, plumbers and electricians.
This massive tax shift expands the sales tax to 100 new items and raises taxes on others. It also raises the lower progressive income tax rates (up to 4.5 percent) to 6.5 percent. Proponents of these tax increases have the audacity to call themselves “No Higher Taxes for Maine” simply because the highest marginal rate of 8.5 percent will be dropped to 6.5 percent.
A recent TV ad from the “No on One” campaign actually dared to say that the tax repeal is “a plan to raise income taxes.” This is beyond stretching the truth; it is an outright falsehood.
And then there is Question 1 itself, which is also very confusing “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?” For one thing, the new law doesn’t just lower some income taxes, it raises them, too, but also it doesn’t just “make changes to the sales tax,” it expands it dramatically and opens the door to more expansions in the future.
In addition, this tax reform law: Puts Maine tax code completely out-of-whack with the federal code; turns thousands of small businesses into tax collectors; makes us even less competitive with neighboring states; and, takes more money out of the Maine economy and sends it to Augusta.
Pretending this law will lower taxes, when in fact it does just the opposite as well as create a host of new economic problems – is just wrong. Vote “Yes On 1” to reject this new, burdensome law.
Rep. Jonathan McKane of Newcastle, a Republican representing House District 51, is serving his third term in the Maine House of Representatives.
State Representative Jonathan McKane represents Edgecomb, Newcastle, Damariscotta, Bristol, South Bristol and Monhegan Plantation.
