Augusta, Maine (Tuesday, September 22, 2015) The Maine Center for Economic Policy (MECEP) issued the following statement in response to media reports that Gov. LePage and the Maine Republican Party will seek to place a citizen initiative on Maine’s ballot to reduce Maine’s income tax rate to 4 percent by 2021. The proponents also indicate that the proposal is a step toward ultimate elimination of the state income tax.
“The Governor’s plan to reduce and eventually eliminate Maine’s income tax is a huge giveaway to the wealthy that will jeopardize funding for schools and other services vital to Maine families and businesses. Implementing a 4 percent flat tax by 2021 will cost nearly $600 million, roughly half of current state funding for K-12 education. The non-partisan Institute on Taxation and Economic Policy estimates that Mainers with annual income above $175,000 would receive almost 50 percent of the benefits from this massive tax cut. The top 1 percent of Mainers with income greater than $390,000 would get an average tax cut of over $21,000 while the 20 percent of Mainers with income less than $23,000 will get an average tax cut of just $14. Ultimately any benefit middle- and low-income Mainers receive from this proposal will quickly disappear in the face of property and sales tax increases required to pay for eliminating Maine’s income tax.”