When it’s time to pay, people don’t really care who collects their taxes. Whether it’s a check to the town office for property taxes, or an additional 5 percent on the bill at a checkout line or a deduction from your weekly pay, it’s all money going out to support the activities of government, either at the state, local or federal levels.

That’s why we were skeptical when Gov. LePage and legislative allies touted the “biggest tax cut in Maine history” in 2011 and bragged that it put money in the pocket of almost all Mainers, particularly middle- and lower-income workers, including thousands who would now pay “no tax at all.”

Impressive if true, but of course, it’s not. Not even close.

You could eliminate the income tax for a single mother earning minimum wage and have almost no impact on her life. But she would still be paying a higher percentage of her income in taxes — taxes on sales, property, a vehicle — than a millionaire in the top bracket.

The uneven distribution of the tax burden was brought home this year when Gov. LePage told us how he would pay for his tax cuts.

He proposed cuts to municipal revenue sharing, cuts to property taxpayer relief programs, cuts to General Assistance, cuts to teacher retirement contributions and flat education funding — all designed to balance the books by shifting responsibility from the state to local governments, inevitably raising taxes on the people the governor claims to have helped.

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Last week, Democrats offered an alternative that takes a more realistic look at the entire tax picture.

House Majority Leader Seth Berry’s bill looks at all the taxes Maine people pay, not just the income tax, and makes adjustments so that everyone is making the same effort.

This approach is simple, straightforward and fair. It would also bring in revenues to lessen the gap between projected revenue and spending over the next two years, and it would give a much-needed break to those at the bottom of the income scale who have been paying more than their fair share on a percentage basis.

It’s true that the wealthy already pay a disproportionate amount of the state’s tax receipts, but that is the wrong way to look at the equation. A much better way — the way that Berry’s bill looks at it — is to consider the total tax bill per dollar of income for every Mainer and equalize the effort. Not everyone can afford to write a big check, but everyone should be asked to pay their share.

According to state tax records, the average Mainer pays 11 percent of his income on taxes, state and local combined. The state’s highest earners pay 10 percent, it’s lowest earners pay close to 17 percent. Under Berry’s bill, the state’s highest earners would have to pay at least the state average in combined taxes, and those making less than $125,000 would get a tax credit if they paid more than the average.

Gov. LePage can call this a tax hike if he wants, but it’s a much more fair way to raise revenue than what he has proposed, which is shifting more of the tax burden onto school districts, cities and towns, which control no revenue stream except the property tax.

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His tax cut may look fiscally prudent if it’s viewed entirely on its own, but real Mainers don’t live that way. A small dip in the income tax does not offset a bigger hike in property taxes, or have any real benefit for local economies.

Berry’s bill would put more money in the pockets of hardworking Mainers who would spend it, circulating it through many local businesses. It would help protect cities and towns from disastrous layoffs, service cuts and tax increases. It would also bring the state budget closer to balance.

That’s why it represents a much more responsible way to look at the state budget than what we have seen from the governor. Lawmakers from both parties should use this framework to reform the state’s taxes.

 


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