Re: “Maine earns poor grades in national manufacturing assessment” (June 13):
Ball State University’s 2014 Manufacturing and Logistics National Report gives Maine failing grades in several areas. According to the author, Michael Hicks, despite Maine’s highly rated human capital, high taxes are a deterrent to manufacturing growth in Maine.
One needs only to compare Maine’s tax structure with that of a state to which manufacturing flocks, Tennessee. A Volkswagen plant there started production in 2011.
There are obviously other factors influencing differences in the economics of both states. However, data in tables compiled by The Tax Foundation and edited by economist Scott W. Drenkard reveals startling facts that confirm Hicks’ position. Maine discourages manufacturing with high taxes.
Maine’s (2010) overall tax revenue per capita was $6,213, Tennessee’s, $4,313. Maine’s excise tax was $515, Tennessee’s, $368. Maine’s property tax was $1,786, Tennessee’s $795. Maine’s income tax was $981, Tennessee’s, $27 (on investments only). In most of these comparisons, Maine’s taxes were even higher than national averages. Maine’s and Tennessee’s tax on corporations are equivalent, which refutes the constant push in Maine to lower the corporate rate.
To encourage much-needed manufacturing to come to Maine, taxes in the above categories must be reduced or eliminated. State general sales tax must be increased and taxing authority extended to local communities, to offset lost revenue. Reducing non-discretionary tax brings increased taxable economic cash flow.
Tennessee depends on a high general sales tax of 9.44 percent that does not negatively impact manufacturing. Despite that high rate, their commercial business flourishes.
Maine’s low general sales tax rate of 5 percent is mistakenly maintained by the myopic claim that a higher rate would discourage commercial business and unfairly impact the poor. That position is obviously shown to be illegitimate by Tennessee’s success with a higher general sales tax.
Jim Chiddix
Waterville
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