From my first time in the Legislature, in 1996, I have been frustrated by our antiquated tax system and the seeming lack of Legislative will to fix something that is no longer working. When I returned to the Legislature in 2006, tax reform was absolutely my highest priority. You can imagine that it has been very exciting for me to be able to participate in an effort to make things better for Maine citizens.
On June 8 you will have a chance to support Maine’s future by voting “No” on Question 1.
In 2009 the Legislature finally passed the first major overhaul to Maine’s tax code in 40 years. Even though the final votes were largely partisan, many of my Republican colleagues thanked me for my vote. However, because opponents of the law gathered signatures to place repeal of this law on the June’s ballot, a No vote is needed June 8 to allow the law to go into effect.
If a No vote prevails, over 95 percent of Maine residents will see an income tax reduction, and over 87 percent of Mainers will see an overall tax reduction once both income and sales taxes are included.
It’s great that this law brings some tax relief to Maine, particularly in this economy when we need it so badly, but to me, the real benefit of this law is that it puts a smarter tax code into place.
How can we continue a system where we count on 40 percent of sales tax revenue coming from the sale of just two items (new cars and building supplies), when this revenue falls off to close to nothing when the economy falls?
How can we continue a system that is burdened by one of the narrowest sale tax bases in the country, taxing just 24 of the 160 categories of items taxed nationally, and making our tax revenues more volatile that they need to be?
How can we continue a system that has one of the lowest meals and lodging taxes in the nation, especially since 40 percent of Maine’s meals and lodging tax is paid by non-residents?
We are living with the same outdated tax system we essentially had in the 1960s. The world had changed since then. Our tax system needs to change.
The new tax law achieves four goals:
• It will help stabilize state revenues, so that we are not forced to deal with the same kind of budget shortfalls we’ve had to during recent years. This will help all Mainers, but especially those who are in greatest need.
(I think in particular about the elderly who will face increased property tax bills if a budget shortfall results in cuts to state aid to education, as they did this year.)
• The law will give a little push to our economy at a time when we desperately need it. Most of Maine’s small business will see a benefit, and the State Planning Office estimates that the new law will create 750 new jobs.
• The law will lower the tax burden on Maine people by $54 million, putting a little more money in our pockets. We do this without reducing any state revenues, but rather, by having non-residents pay a little more. (For those of you who call out for cuts, do you realize that in the last eight years the state budget has only grown from $5.4 billion to $5.5 billion, far less than inflation? We have already cut in so many areas.)
• Finally, the law shares the benefits fairly. Every income group, whether low, middle or high income-will pay close to the same the proportion of taxes as they do now. Yet because the tax burden on residents drops by $54 million, every group wins. (Actually, low and middle income persons benefit slightly more, so that the resulting tax code is actually more progressive.)
I’ve been shocked by the amount of misinformation circulated by the supporters of the repeal. Some of the statements are just false, like the preposterous claims by a participant in the recent Wiscasset debate. (“What he is saying is just not true,” said Michael Allen of Maine Revenue Services, which has undertaken exhaustive objective analysis of the law.)
I’m currently hearing that the law eliminates itemized deductions. This is real distortion of the truth. The benefits of itemized deductions do not go away. Rather, they are provided in another way, through a new household credit that is linked to the amount you itemize. In most instances, the new credits provide greater benefits than the old system.
I’m also hearing that the law is a give away to the rich. This totally ignores the facts. In 2011, the top 10 percent of taxpayers in Maine will pay 49.8 percent of the tax burden under the old law and 50.1 percent under the new law. In other words, higher income people will actually pay slightly more of the overall burden under the new law (not only in 2011, but beyond).
Now, some of Maine’s richest people will see a large tax cut, but that is because they pay so much in taxes. They are not benefiting at the expense of low or middle income persons.
The attempt to turn this issue into some kind of political warfare doesn’t make sense. Sadly, misinformation is being used to sway many Maine people to vote against a law that will be good for them and good for Maine. It is politics at its worst, using a partisan approach to jettison legislation that is incredibly good for Maine.
It took my whole legislative career, but there is finally a chance to pass meaningful tax reform that will stabilize revenue, create jobs, and put some extra money in our pockets at a time of great need. I urge you to vote “No” on Question 1, and help Maine move forward.
(Wendy Pieh, D-Bremen, represents House District 50, which includes Waldoboro, Nobleboro Bremen and part of Jefferson.)
Bremen
