Using improved data, a foundation ranks the state's burden at 15th in the nation, instead of among the worst
The idea that Maine has one of the nation's highest tax burdens -- if not the highest -- has burned state officials for years.
Maine's ranking, as calculated by the fiscally conservative Tax Foundation think tank, has been used in policy debates, in political rhetoric and in letters to editors.
Turns out, it might not be as bad as people think.
The Washington, D.C.-based Tax Foundation put out its yearly report Thursday, revising its historic numbers and releasing fresh data.
In fiscal year 2008, Maine ranked 15th nationwide in state and local tax burden on residents. The numbers indicate that Mainers had an average tax burden of 10 percent of their income.
New Jersey had the highest tax burden, according to the foundation, with residents forking over 11.8 percent of their incomes to pay for state and local taxes.
In last year's report, the foundation ranked Maine second, after Vermont. According to the revised numbers released Tuesday, Maine would have ranked 14th last year.
In 2006, the group had Maine as the top state for tax burden. But the revised numbers have Maine at No. 7 for that year. In fact, at no time was Maine ranked higher than fifth.
"We think this will help end the myth about Maine being the highest taxed state in the country," said David Farmer, spokesman for Democratic Gov. John Baldacci. "We didn't think it was true."
Added House Majority Leader Hannah Pingree, D-North Haven: "It's helpful to have accurate facts."
Essentially, what's changed is that the foundation has separated from Maine's overall tax collections the property taxes paid by out-of-staters who own second homes here. It's also factored in taxes paid by Mainers to other states --either because they work or own property there.
The net result has been a drop in ranking. Before that was done, Maine's tax collections were divided by a residents-only pool of people and compared to the state per capita income of $38,309.
It's a change Maine officials have pushed for years, complaining that the study was skewed without it. But because of data limitations, the foundation wasn't able to calculate what Mainers were paying in out-of-state taxes. So it didn't subtract the out-of-staters paying taxes to Maine, said William Ahern, the foundation's director of communications.
"Every year, more and more data sets become available," said Ahern. "This study is now leaps and bounds ahead of what it was just a few years ago Not that it's perfect, but it's a much truer picture of Maine's tax burden."
The foundation's ranking has been a key part of a running debate in Maine that has fueled recent failed efforts at the ballot box to cap municipal tax increases, and gotten a so-called Taxpayer Bill of Rights enacted.
"It's been useful for folks who have wanted to beat government up," Farmer said.
Sen. Joseph Perry, D-Bangor, chairman of the Legislature's Taxation Committee, said it was "catchy" to call the state No. 1 in terms of tax burden.
"It made a great way for folks who are interested in discrediting us, opposing things we're working on," said Perry. "I think this is a much more accurate, realistic assessment, but it hasn't lowered anybody's tax bill. I'd like to lower our ranking, but through burden reduction."
House Minority Leader Joshua Tardy, R-Newport, said he was encouraged the state doesn't "have that albatross hanging around our neck.
"We're at a point where we think the people understand that the tax burden has to go down, no matter what the rank is in any comparative analysis," said Tardy. "It's frankly too high in Maine."
Tardy suggested there were other indicators Maine should look at to chart economic vitality, including business-friendliness ratings, job-creation numbers, unemployment rates and others.
Sen. Richard Nass, R-Acton, a member of the Taxation Committee, said that those people who work on tax policy in the state have agreed that taxes are too high. The high rankings in the past, he said, have been useful to get the attention of Mainers who aren't paying attention to the problem.
"Tax burden is just one of the many indicators," he said.
Ahern, from the foundation, noted that Mainers ranked 15th in terms of tax burden, but 34th in per capita income -- which came in at $38,309.
"We might suggest that even though we've made this correction, maybe the tax burden is still a little high," said Ahern. "We'd like to see those numbers closer together."
Staff Writer Matt Wickenheiser can be contacted at 791-6316 or at:
mwickenheiser@pressherald.com
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