The Governor’s Budget proposal spends $20 Million for income tax reductions of over $3,000 each in 2013 for about 7,000 tax households with incomes above $350,000.
$20 Million is more than BOTH:
– the $8 Million in savings projected in 2013 from the proposed elimination of health coverage for nearly 14,000 working parents (between 133-200% of federal poverty level or under $44,700 for a family of four)
– AND the $7 Million in savings projected from the complete elimination of health coverage and other benefits (Mainecare, TANF, Food Supplement and SSI) for a small number of legal immigrants.
MANY low-income households will experience NO income tax reduction at all, and those who do with incomes under $35,000 will receive an average annual income tax reduction of $99, far less than their increased health costs AND increased property tax costs.
In addition, property tax increases will result from BOTH the 20% reduction in the property tax relief program which costs beneficiaries up to as much as $400 AND likely increased property taxes due to reductions in school funding and revenue sharing.
Already, 140,000 tax households with annual income under $14,000 pay more than 15% of their income in the combination of sales, excise and property taxes. About 115,000 of them will receive NO benefit from the Governor’s tax proposals.
The Governor’s Budget proposal gives $26.5 Million to about 28,000 tax households between $160,000 and $350,000.
This $26.5 Million is MORE than the $14 Million in savings projected from the cut to the Medicare Savings Program (incorporating Drugs for Maine’s elderly) for about 40,000 elders and people with disabilities.
The Governor’s income tax proposals spend $200 Million in the current biennium and $400 Million in the next biennium, which would increase substantially the program cuts that will be required in 2014-15. Among these future costs are the estimated $51 Million in costs for the proposal to increase the estate tax exemption from $1 Million to $2 Million in the next biennium.
LD 1147, raising the estate tax exemption from $1 Million to $5 Million is projected to cost almost $30 Million in FY 2013, exacerbating the cuts. described above. In the next biennium it is projected to cost an additional $73 Million.
Christopher St. John, executive director, Maine Center for Economic Policy