Recent Maine Income Tax Cut Results in a “Great Tax Shift” to Low and Middle Income Families 2 in 5 Maine families- the 40% who can least afford it -will pay higher property taxes

Augusta, Maine (Tuesday, October 16, 2012) Maine’s new income tax cut will result in a “great tax shift” to low and middle income families say the authors of an analysis released at a State House press conference today by the Maine Center for Economic Policy (MECEP).  MECEP Executive Director Garrett Martin and Policy Analyst Joel Johnson based the findings of The Consequences of Maine’s Income Tax Cuts: Recent Tax Cuts Increase Costs for Municipalities, the Poor, and the Middle Class on their analysis of data from Maine Revenue Services and the legislature’s Office of Fiscal and Program Review.

“To pay for tax cuts that transfer tens of millions of dollars to the richest Mainers, the governor and the legislature shifted costs to local communities, forcing them to raise property taxes to avoid damaging cuts to education, road maintenance, fire and police protection, and other basic services,” Martin said.  “This will actually increase the combined state and local tax bill for 270,000 low- and middle-income families- the 40% of Maine’s taxpayers who can least afford it. This is the wrong direction for Maine. Instead of cutting taxes mostly to benefit the wealthy, we need to move toward a fair tax system and invest more in schools, roads, health care, and other basic services that strengthen communities and make our economy more competitive.”

The report emphasizes that low- and middle-income families already pay a higher proportion of their incomes in state and local taxes than those with higher incomes.  While income tax rate increase with income, sales and property taxes do not.  An increase in property or sales tax rates has a greater impact on middle- and low-income people than an increase in income tax rates. High-income earners benefit most from income tax cuts.

“We all want a stronger economy and more job creation, but income tax cuts that benefit the rich and stick everyone else with the bill aren’t going to get us there,” added Johnson. “By blowing an enormous hole in our budget, these tax cuts actually hurt our ability to invest in all the things that actually do create jobs, like a skilled, healthy workforce, state-of-the-art transportation and communications systems, and world-class public education for all Maine kids.”

Waterville mayor Karen Heck, teacher and Maine Education Association president Lois Kilby-Chesley, and Borealis Bread founder Jim Amaral joined MECEP at the press conference to discuss the report’s findings.

The Consequences of Maine’s Income Tax Cuts: Recent Tax Cuts Increase Costs for Municipalities, the Poor, and the Middle Class is available on MECEP’s website, click here