Augusta, Maine (Monday, March 12, 2012) — A new study released today confirms that the “Responsible Solution” proposed by the Engage Maine coalition in January would restore tax fairness and raise needed revenue without negative effects upon the state’s economy. The report, “Raising Revenue from High-Income Households: Should States Continue to Place the Lowest Tax Rates on Those with the Highest Incomes?” was prepared by Jeffrey Thompson of the Political Economy Research Institute (PERI) at the University of Massachusetts, Amherst. Engage Maine, a coalition of more than 100 progressive Maine leaders, nonprofit organizations and allies, has called upon legislators to roll back recent tax cuts for households earning more than $200,000 and increase the effective tax rate on the top 1% of taxpayers to the average tax rate of all Maine households to recover more than $70 million in revenues lost under the state’s current tax policies. PERI issued the report today in conjunction with the Maine Center for Economic Policy (MECEP).
“There’s a lot of politicized rhetoric about what could happen if states moderately raise their tax rates for their wealthiest citizens,” Thompson said. “But the reality, based on very clear data, is that the end result will be more revenue in the state coffers to pay for public services. None of the scare stories—people fleeing the state, people stopping work, or not starting new businesses—have been shown to happen in the past, or are likely to happen now. Wealthy households have reaped vast benefits from state and federal tax codes for decades now, and to look to them now for much-needed revenue is sound policy,”
“The Engage Maine ‘Responsible Solution’ restores fairness to Maine’s tax code while providing much needed revenue to meet the state’s budget challenges,” MECEP Executive Director Garrett Martin said. “The 2011 state budget actually increased taxes on those who can least afford it and gave huge windfalls to those who need it least. This new PERI report verifies the case that MECEP and our Engage Maine partners have made to legislators and the people of Maine. It makes good economic sense to demand that Maine’s wealthiest pay their equitable share to fund health care, education, and other critical programs that lessen the damage caused by the worst recession since the Great Depression.”
An issue brief entitled “Raising Revenue from High-Income Households in Maine” is available on the MECEP website by clicking here. The full PERI study is available by clicking here.