The Legislature’s Taxation Committee passed two bills last week that would raise millions of dollars to help fund important priorities in the next biennium. Passage out of committee is a major step toward increasing tax fairness in Maine. Now these bills need support in the House and Senate to get to the Governor’s desk.
LD 1089, An Act to Permanently Fund 55 Percent of the State’s Share of Education by Establishing a Tax on Incomes of More than $1,000,000
As amended in Committee, LD 1089 would create a tax of 2% on incomes over $1 million for single filers, over $1.5 million for heads of households, and over $2 million for people married filing jointly. This bill is expected to raise at least $85 million for education in the next biennium and $143 million in the one after.
Maine’s top tax rate currently kicks in a $61,600 for single filers — meaning teachers and firefighters pay the same top tax rate as millionaires. That’s not fair. The wealthiest 1% of Mainers also pay a smaller share of their income in taxes than Mainers with middle income.1 The millionaire tax would help make Maine’s tax code more progressive by asking more from top earners.
Opponents argue millionaires would flee the state if taxes increase, but research shows tax flight is a myth. Often folks move for personal reasons, like for a job or to be closer to family, or for quality of life, not taxes.2
LD 1879, An Act to Support Maine’s Agricultural Economy by Increasing Revenue from the Corporate Income Tax
LD 1879 would increase Maine’s top corporate tax rate on profits over $3.5 million from 8.93% to 10% and is expected to raise $100 million over the biennium to support the agricultural economy.
At the federal level, corporate tax rates were slashed under the Tax Cuts and Jobs Act of 2017 from 35% to 21%. Research shows most of that money didn’t trickle down to workers or spur greater investment, but instead largely benefited those already at the top, including shareholders and executives.3
Opponents argue this would make Maine’s corporate tax rate too high, but Maine currently has one of the lowest corporate tax rates in the nation on the first $350,000 of earnings, at 3.5%.4 LD 1879 preserves that low rate for small businesses, but asks more from corporations with higher earnings. Big corporates aren’t going to stop doing business in Maine because of a small increase in the corporate income tax.
Will Maine ask more from those who have the most or the least?
With the current budget shortfall, the State is facing a crucial choice — asking more from those who have the most to help fund important priorities and supports for Mainers, or asking those who have the least to sacrifice even more. Without additional funds, Maine faces cuts to important supports like child care, health care, and food assistance. The public overwhelmingly supports asking the wealthy to pay more. The Legislature should follow the will of the people and put these bills on the Governor’s desk.
Notes
[1] https://itep.org/whopays/maine-who-pays-7th-edition
[4] https://taxfoundation.org/data/all/state/state-corporate-income-tax-rates-brackets
