MECEP Report: Proposed Funding Initiative Will Rollback Recent Income Tax Cuts for Wealthy Mainers to Provide More than $150 Million Annually for Student Learning

September 19, 2016

The Maine Center for Economic Policy finds that a three percent tax on income above $200,000 dedicated to K-12 education will increase state funding for schools, promote tax fairness, help promote greater opportunity for low-income students, and level the playing field between property-poor and property-rich towns.

Augusta, Maine (Monday, September 19, 2016) The Maine Center for Economic Policy (MECEP) today released a new report, Moving Maine Students to the Head of the Class, the findings from its research and analysis regarding the proposed ballot initiative (Question 2) that would roll back recent tax breaks for the wealthy and dedicate this revenue toward additional state level resources for schools. 

“The Maine Center for Economic Policy finds that a three percent tax on income above $200,000 dedicated to K-12 education will increase state funding for schools, promote tax fairness, help promote greater opportunity for low-income students, and level the playing field between property-poor and property-rich towns,” the report states. “It will have a positive impact for students, businesses, and Maine families, strengthening Maine’s economy.”

The report finds that the proposed ballot initiative would :

  • Bring the state closer to meeting the voter-approved school funding mandate. Since Mainers voted in 2004 to pledge the state to provide 55 percent of the funding for K-12 education, the state’s share of education funding peaked at 52.86 percent in 2009 and has since declined to 47.18 percent for fiscal year 2017. Because of tens of millions of dollars in income tax cuts since 2011 that largely benefit wealthy households, Mainers will lose $297 million in state revenue in 2017 that would have been available for education funding. 
  • Invest more than $150 million annually to improve Maine students’ learning. Creating a fund dedicated to K-12 classroom instruction paid for by a three percent tax on household income over $200,000 would increase state funding for education by $159 million in its first year and increase incrementally thereafter.
  • Lessen the property tax burden on Maine households and businesses. Since 2011, Maine communities have had to raise over a billion dollars in property taxes- an average of $180 million each year -to compensate for the state under-funding its share of education costs.  
  • Improve fairness and transparency in Maine’s tax code. The 20 percent of Mainers with the lowest household incomes currently pay a higher proportion of their income in total state taxes than the wealthiest one percent of Mainers. The ballot initiative will make Maine’s tax code fairer by increasing taxes only on the wealthiest Mainers. For example, a household with an annual income of $201,000 would pay the three percent only on the last $1,000 of income for a $30 tax increase. 
  • Expand our potential to meet the needs of all Maine students. Maine communities with higher levels of low-income students spend less per student on average than communities with fewer low-income students, and schools with higher rates of students living in poverty have lower test scores. As the proportion of Maine’s low-income students approaches one out of two students, increased state funding for their schools will enable low-income towns to invest in additional learning resources for their students.
  • Make education funding and access to quality education more consistent statewide and among Maine’s regions. By increasing state funding the proposed initiative will improve the capacity for all Maine communities to afford a high quality K-12 education that prepares students to succeed in the classroom and the workforce. All communities in Maine benefit from the improvements the ballot initiative will bring to our workforce and business environment. This will strengthen the economy for all Mainers throughout the state.

“Mainers know that a sound, first-rate education is the gateway to good jobs, more prosperous families, and greater opportunity for successful careers,” report author Sarah Austin writes. “MECEP’s research and analysis confirms that the proposed education funding initiative on the November ballot would raise crucial revenue for K-12 education in Maine at a time when state spending as a share of education costs and equity in public education between property-rich and property-poor communities is down. This additional revenue will expand equitable access to quality education for all students, improve the fairness of Maine’s state and local tax system, and provide the resources for state and local lawmakers to invest in quality education for all Maine students.”

The study, Moving Maine’s Students to the Head of the Class, is available on MECEP’s website. 

PDFFor a PDF of the full report, click here

PDFFor a PDF of the report’s executive summary, click here