Legislators are working to close a $938 million budget gap that is the result of the worst recession since the Great Depression and unpaid-for tax cuts that mostly benefit the wealthy. Governor LePage’s solutions only shift state costs to our towns and cities, eliminate property tax relief and public services for residents who need it most, and fail to invest in our kids, our workforce, and our future.
As the legislature heads into the home stretch here are five ways to balance Maine’s budget, maintain investments in education and other vital public services, and avoid costly property tax increases for working families:
1. Repeal the 2011 income and estate tax cuts. Most Mainers will never see the benefits of the 2011 income and estate tax cuts since they are paid for by property tax increases that will hit low- and middle-income families hardest. At the end of the day, Maine’s wealthiest residents will still get a hefty tax cut while taxes on the typical Mainer will go up. This makes no sense and can be avoided by repealing the 2011 tax cuts.
2. Increase the taxes that we can truly export to out-of-state visitors and nonresidents. Tax rates on meals, lodging, and rental car sales are below the average of other New England states. Asking out-of-state visitors to pay more will generate much needed revenue that we can invest in Maine’s infrastructure and communities, making the state a more attractive place to visit and do business.
3. Get rid of corporate tax breaks that aren’t helping our economy. Large corporations like Walmart get significant subsidies through Maine’s tax code giving them both a financial windfall and an unfair advantage over Maine-owned businesses. These subsidies deliver no economic benefits – Walmart would do business in Maine anyway – but hurt our ability to invest in education and infrastructure that do make Maine a better place to live and do business. Maine’s patchwork of tax loopholes for businesses merits much greater scrutiny and accountability.
4. Make sure Maine’s wealthiest residents pay their fair share. The richest Mainers pay less than 10 cents on every dollar in state and local taxes, while the poorest 20 percent pay more than 17 cents on every dollar. It’s time for this to change. Maine’s wealthiest taxpayers should pay at least the same percentage of their income in taxes as the average Mainer. This is a better solution than the Governor’s budget proposal which requires low- and middle-income Mainers to shoulder the costs of tax cuts for Maine’s wealthiest residents making an already unfair tax system even more so.
5. Target tax relief where it is needed most and where it is most effective. Not all tax relief programs are created equally. The Maine Residents Property Tax and Rent Refund program is the best way to reduce property taxes for Maine residents who need it most. This program should be enhanced and the application process improved so that hardworking Mainers who pay more than 6 percent of their income in property taxes get the break they need.
Maine’s economy does not happen by accident. Legislative policy choices influence what our economy will look like and who can or cannot participate in that economy. Whether it is deciding who pays taxes and how much, who has access to education and the quality of that education, or what we invest in our people and our communities, the governor and the legislature choose the path we will follow.
Right now Maine’s legislature has the opportunity to strengthen the middle class by adopting budget solutions that ensure the rich pay their fair share, support working families, and stimulate economic growth.