“Republican state lawmakers pushed hard for huge tax cuts for the rich during the past two years. If you’re a middle-class Mainer, you can expect to get back under $100. If you are among the top 1 percent, you can expect to get back more than $3,000.”
– State Rep. Seth Berry, D-Bowdoinham, in a radio address last week
We’re in the vicinity of accuracy with this assertion about the impact of state tax cuts.
The average middle-income Maine family should get back a little more than $100, and the average one-percenter won’t quite get back $3,000 as of tax year 2013, according to state data.
The focus here is on the tax changes pushed by Republicans in a biennial budget passed in 2011. The middle-class figures cited in this radio address are close to the latest state estimates of the effects on these income groups.
The changes cut the top income tax bracket rate from 8.5 percent to 7.95 percent, while those paying 4.5 percent and 7 percent were moved to 6.5 percent.
Those previously paying a 2 percent income-tax rate went to 0 percent. That, along with a change in the personal exemption amount, eliminated income tax liability for about 70,000 low-income Mainers.
Before checking the figures offered by Berry, we needed a usable definition of “middle class,” so we reached out to Jodi Quintero, spokeswoman for the Maine House Democrats, to find what they used as a reference point.
She cited one section of a 2011 document from the Maine Center for Economic Policy, a liberal think tank, which says those earning an adjusted gross income ranging from $20,526 to $35,269 will get an average tax break of $70.
We thought that was a bit low, because according to Maine Revenue Services data, only 30 percent of Maine taxpayers were below that low mark, with 50 percent above the high mark. That means the group encompasses a lower-middle-class range of Maine taxpayers.
Another part of that Maine Center for Economic Policy sheet defines middle-income taxpayers as earning $27,065 to $46,582. Updated Maine Revenue Services data has that group pegged slightly higher now, from $27,312 to $47,255. Exactly 40 percent of Maine taxpayers are under that low mark and exactly 40 percent are above it, meaning the group captures a perfectly balanced section of middle-income taxpayers. Within that group, the average taxpayer should expect a cut of $119 in 2013, data shows.
Finding the break for one-percenters is clearer and easier. In Maine, that vaunted group is made up of those making an adjusted gross income of $356,608 and up. They get an average cut of $2,810 under the new rules.
Some of the data Quintero said they used to make the $3,000 claim has since been updated. Data we received from the Maine Revenue Services in June said the average one-percenter would receive an average tax cut of $2,905. That’s the number they should have used, but they used a slightly different one.
Since not all one-percenters are receiving the cut, the average tax cut for those people getting the tax cut was estimated at $3,015 in June. That’s been updated to a lower mark, $2,918, since then.
It’s worth noting, however, that the data show that the nearly 7,000 taxpayers in Maine’s 1 percent will also pay 21.8 percent of all state income taxes. Together, that middle-income group made up of more than 135,000 taxpayers we identified will pay less than 6 percent, meaning Maine’s income tax structure is highly progressive. And as we noted in an August Truth Test, it’s more progressive than before the changes.
Verdict: Berry didn’t characterize the tax cuts perfectly, but it was reasonably close. A better measure of the middle class could have been made, and the data could have been better interpreted for the 1 percent, but that’s all that’s affecting the claim. We don’t see any dishonesty here.
We rate this statement mostly true.
Kennebec Journal Staff Writer Michael Shepherd can be contacted at 621-5632 or at: [email protected]