Once again, Legislature extends broken tax break for businesses

When funding is funneled away from public priorities like schools, infrastructure, and health care and into business tax breaks, we should be confident that the spending is sound and will deliver results for Maine people. But again, this legislative session, state lawmakers extended a multi-million-dollar, unproven business tax break despite its well-documented flaws.1

Legislators voted to continue funding the Pine Tree Development Zone (PTDZ) program,2 despite program shortcomings identified by legislative watchdog the Office of Program Evaluation and Government Accountability (OPEGA) in its 2017 and 2020 reports. The PTDZ program costs the state upwards of $10 million each year3 and offers a variety of tax breaks to businesses in certain sectors4, including eliminating state income tax for up to five years for businesses creating as little as one job.

The high cost of providing these tax giveaways to businesses is not justified by the resulting benefits. For example, the PTDZ program makes no differentiation in benefits based on the size of the business or number of jobs created. A large corporation with a high tax liability could receive a massive tax cut at great expense to the state, whereas a small business could receive a much lower tax cut. In both scenarios, the business would only be required to add at least one job, but the benefit to each — and the cost to Maine taxpayers — would be vastly different.

OPEGA’s research found it was unable to determine how many jobs were actually created by the PTDZ program, or whether the program helps businesses create more quality jobs than they would otherwise.5 OPEGA also found the design of the PTDZ program was not well-aligned to meet the program’s intended goals and desired outcomes.6 Yet after receiving these findings five years ago, the Legislature continued to extend the program, most recently allowing new applicants through the end of 2023 and authorizing benefits through the end of 2033.7

The Legislature did make some changes to the PTDZ program in response to OPEGA’s findings, including revisions to goals and reporting requirements.8 One goal that was dropped — targeting benefits to higher unemployment areas9 — removed a key original intent of the program to provide greater benefits and incentivize investment in areas of the state struggling economically. The Legislature’s Taxation Committee found this goal had been watered down over time through various changes to the program.10

Maine must invest in areas of the state where people need it most, whether in underserved communities, struggling small businesses, or families with low and middle income. The Maine Center for Economic Policy encourages legislators to go back to the drawing board rather than continuing unproven, sweeping tax breaks for businesses at the expense of hardworking Mainers. Spurring economic growth and creating jobs are important for Maine’s future — and there are better ways11 to do it than continuing this flawed program.


[1] https://www.mecep.org/blog/pine-tree-development-zones-promised-jobs-but-didnt-deliver-its-time-to-end-them/

[2] PL 2021, Ch.398, Part IIII. http://www.mainelegislature.org/legis/bills/getPDF.asp?paper=HP0156&item=7&snum=130

[3] https://www.maine.gov/revenue/sites/maine.gov.revenue/files/inline-files/tax_expenditure_21_0.pdf

[4] PTDZ qualifying sectors include: financial services, manufacturing, biotechnology, information technology, aquaculture and marine technology, precision manufacturing technology, composite materials technology, environmental technology, advanced technologies for forestry and agriculture, call centers in Aroostook or Washington Counties Sources: 30-A MRSA §5250-I(16) & (18); 5 MRSA §15301(2)

[5] https://legislature.maine.gov/doc/1809, p.11

https://legislature.maine.gov/doc/4702, p.10

[6] https://legislature.maine.gov/doc/1809

[7] PL 2021, Ch.398, Part IIII. http://www.mainelegislature.org/legis/bills/getPDF.asp?paper=HP0156&item=7&snum=130

[8] https://legislature.maine.gov/doc/4702, p.5

[9] https://legislature.maine.gov/doc/4702, p.5

[10] https://legislature.maine.gov/doc/1986 p.25

[11] https://www.kauffman.org/currents/rebuilding-the-small-business-sector-bruce-katz/