LD 229 and LD 1089 would make Maine’s tax system fairer, more sustainable, and better aligned with the needs of working families and small businesses. Far from undermining Maine’s economy, these proposals strengthen it by correcting longstanding inequities and investing in the shared foundations of prosperity: quality schools, healthy communities, and modern infrastructure.
Every time Maine considers asking the wealthiest among us to pay a little more, opponents of tax fairness lean on familiar talking points: raising taxes on those at the very top of the income scale will supposedly slow growth, drive away talent, and hurt working families.
We’ve heard it all before1 — and once again, the facts don’t back it up.
Maine’s tax system is upside down and these bills begin to fix it
Maine’s tax code currently asks more of families with middle income than it does of the wealthiest residents. Mainers with incomes from $59,398 to $73,927 already pay 10.3% of their income in state and local taxes, while the wealthiest 1% pay a smaller share.2 Nurses and plumbers face the same top income tax rate as millionaires. That’s not fair and it’s not good economics.
LD 2294 restructures income tax brackets and expands credits so roughly 70% of Mainers — primarily married families making under $300,000 and single filers making under $166,000 — receive a tax cut, according to MECEP analysis.
LD 10895 applies a modest surcharge only to income above $1 million ($2 million for married couples), affecting fewer than 0.2% of taxpayers. For those households, the average increase amounts to under 1% of annual income and comes after decades of federal tax cuts that overwhelmingly benefit the ultrawealthy. The top 1% saw an average tax cut of $34,340 (2.2% of income) from HR1 alone, while the bottom 20% saw a $30 cut (0.2% of income) according to ITEP analysis. These federal tax cuts for the rich are on top of those they received at the state level under Governor Paul LePage.
The overwhelming majority of small businesses won’t be affected
The idea these bills fall heavily on small business owners conflates local, community-based businesses with high income individuals whose business income flows through personal tax returns.
The overwhelming majority of genuine small businesses — the corner stores, farms, contractors, and startups that employ most Maine workers — earn nowhere near enough in net profits to see a tax increase from this bill. In fact, 92% of individuals who claim business income on their personal taxes make under $200,000 per year and would see a tax cut or no change at all.6
For those making over $500,000 or even $1 million annually, higher top marginal rates don’t prevent hiring or expansion. What actually hurts small businesses is underinvestment in workforce pipelines, child care, transportation, broadband, and education — the very things these bills help fund.
Well-funded- public systems are not a drag on local enterprise; they are a prerequisite for it. Austerity measures adopted by Governor LePage to pay for his tax cuts that disproportionately benefited wealthy Mainers proved a drag on Maine’s economy leading to one of the slowest economic recoveries of any state and a longer period of economic decline in rural Maine than after the Great Depression.7
Tax flight is a myth
The claim that higher taxes drive wealthy people out of state is persuasive because it’s simple. It’s also wrong.
Nationwide data analyzed by the Center on Budget and Policy Priorities8 shows taxes play little to no role in interstate migration, including for high-income households. People move primarily for jobs, housing, family ties, and quality of life, not marginal tax differences.
The most compelling real-world evidence comes from Massachusetts. In 2022, voters approved a 4% surtax on income over $1 million for all filing statuses — double the size of LD 1089. Opponents predicted an exodus of millionaires. Instead, Massachusetts raised over $2 billion for education and transportation — nearly twice initial projections — and saw a 38.6% increase in the number of millionaires in the state after enactment.9
Maine’s proposal is smaller, more targeted, and paired with broad-based tax relief. There is no credible evidence it will produce a different result.
New Hampshire comparisons ignore key facts
Comparisons to New Hampshire that suggest Maine must compete by lowering taxes on high incomes ignore four critical realities:
- New Hampshire relies heavily on property and consumption taxes, which fall hardest on renters, older people, and working families. “Low-tax” states are often high-tax states for people with low incomes.10
- Lower taxes are not a recipe for economic success. States that consistently rank high in income growth and business formation also invest in education,11 infrastructure,12 and public health13 — investments that require sustainable revenue.14 The federal Tax Cuts and Jobs Act of 2017 provided massive tax cuts to businesses that primarily resulted in windfalls for already wealthy shareholders and executives, not benefits to workers.15
- More people move from New Hampshire to Maine than the other way around. According to analysis from the state of New Hampshire, Maine is the only New England state that has a positive net migration rate with New Hampshire.16
- Rather than pursue a race to the bottom, Maine can utilize progressive taxation to fund needed investments. With their fair share tax revenue, Massachusetts has funded $51 million in affordable childcare, distributed $325 million to municipalities for maintenance of locally owned roads and bridges, and $724.2 million to close the achievement gap in schools.17
Economic volatility comes from overstressing the working class
Some people say depending on the wealthy to pay most of the taxes can cause unpredictable swings in the money the government collects. But Maine already faces long-term risks from underfunded systems, demographic shifts, and rising costs. Education, health care, and local services are expensive and underfunding them creates instability of a different kind: staff shortages, declining quality, rising property taxes, and long-term economic drag.
Massachusetts’s experience again shows the alternative: progressive revenue reforms can raise stable, recurring funding while strengthening the broader economy.
An economy for all, not just the few
Bad policy choices — new ones and the lingering effects of old ones — are creating unprecedented economic challenges. These policies protect the wealthy and big corporations. We must change course and put working people first.
LD 229 and LD 1089 recognize a simple truth: economies work best when everyone contributes fairly and benefits from strong public systems. Working families are already doing their part. The wealthiest among us can afford to do the same and Maine will be stronger for it.
Notes:
[1] Maine Center for Economic Policy. “State tax and budget cuts don’t boost economic activity and can cause harm.” August 18, 2020.
[2] Maine Revenue Service, Office of Tax Policy. “Maine State Tax Expenditure Report 2026 – 2027”; Table 5.
[3] Maine Revenue Services, Office of Tax Policy. “Maine State Tax Expenditure Report 2026 – 2027.”
[6] MECEP Analysis of IRS SOI Tax stats
[7] Myall, James. “A New Great Depression in Rural Maine.” Maine Center for Economic Policy. July 31, 2017.
[8] Mazerov, Michael. “State Taxes Have a Minimal Impact on People’s Interstate Moves.” Center on Budget and Policy Priorities. August 2023.
[9] Ocampo, Omar. “Wealth Expands After Higher State Taxes on High-Income Earners.” Institute for Policy Studies DC. April 2025.
[10] Institute on Taxation and Economic Policy. “Who Pays? A Distributional Analysis of the Tax Systems in All 50 States.” 7th edition, January 2024.
[11] Berger, Noah and Fisher, Peter. “A Well-Educated Workforce Is Key to State Prosperity.” Economic Policy Institute. August 22, 2013.
[12] “Prioritizing Approaches to Economic Development in New England: Skills, Infrastructure, and Tax Incentives.” Political Economy Research Institute, University of Massachusetts, Amherst, August 2010.
[13] Duarte, Raul. “Understanding the Link Between Health and Economic Growth: CID Faculty Research Insights.” Harvard Center for International Development. June 12, 2025.
[14] Buffie, Nick and Davis, Carl. “Trickle-Down Dries Up: States without personal income taxes lag behind states with the highest top tax rates.” Institute on Taxation and Economic Policy. October 26, 2017.
[15] Fenton, George and Jacoby, Samantha and Marr, Chuck. “The 2017 Trump Tax Law Was Skewed to the Rich, Expensive, and Failed to Deliver on Its Promises.” Center on Budget and Policy Priorities. June 13, 2024.
[16] United States Census Bureau. “State-to-State Migration Flows: 2024”.
[17] Massachusetts Executive Office for Administration and Finance. “Fair Share is delivering real results in education & transportation.” February 5, 2026.