Ethan: Did I just hear the governor correctly? Did he just tell Don Carrigan (WCSH-TV Channel 6/WLBZ-TV Channel 2 political reporter) that he wants to eliminate the income tax and pay for it by broadening the sales tax?

Phil: Something like that. He’s not wasting any time getting his second term underway.

Ethan: Clearly not. This is the same bad idea legislators passed in 2010 that was repealed by the voters.

Phil: It was not “legislators.” It was “Democratic legislators” and a “Democratic governor.”

Ethan: Don’t remind me.

Phil: But the difference between what the governor is proposing and what Democrats proposed is that Democrats tried to use their “tax reform” to actually raise more revenue for the “all-knowing,” “all-caring” Maine Legislature. Your guys hoped your simple idea would not get exposed as another tactic to transfer even more money from the family checkbook.

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Ethan: Um, no, it didn’t. The 2010 package reduced state revenue by almost a million dollars in the first biennium. The reason it failed is because it cut taxes on the wealthy and raised taxes on everyone else. Exactly what Gov. LePage is now proposing.

Phil: But think of the people and former Mainers who would flock here to invest in our economy and create jobs if we could get the income tax lowered significantly.

Ethan: Do you realize that eliminating the income tax would cost us over $1.3 billion in revenue annually? That is almost half the state budget. Think of how bad our schools would become. How our seniors would have no housing. How no one would be able to protect our environment. How crime would spread as we laid off thousands of cops. How much property taxes would skyrocket as towns tried to meet the needs of their residents.

Phil: As your mentor Ronald Reagan said, “There you go again.” Gov. LePage didn’t say he would wipe out the revenue. He suggested it would come from different sources. But think of the opportunity this would present. All of a sudden New Hampshire would not be able to steal our companies. Businesses in Massachusetts would look north as they saw an immediate reduction in their expenses. Even “snowbirds” might come home from Florida.

Ethan: You’re gonna have to change the weather for that last prediction to come true. You are also going to have explain to people how you will replace the revenue so that families won’t lose half the services they count on. Just take a look at how badly Kansas has fared when their governor implemented similar tax cuts.

Phil: As the governor said, broaden the sales tax. Make our economy more consumer-driven. Those who can afford the luxury to buy fancy cars and vacation in fancy homes pay more. The rest of us pay less. You should love that.

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Ethan: You Republicans are always so bad at basic math. In order to replace the income tax, you would have to raise the sales tax to over 12 percent or broaden it so far that you would be taxing food and heating oil. That means the rest of us will end up paying a much higher percent of our income for the same level of service.

Phil: Think creatively, my friend. Maybe we go halfway by cutting the income tax by 50 percent and pay for it through a combination of sales tax expansion and incentivizing county government to reduce the costs of local government.

Ethan: Well, I am glad you have realized a complete elimination is unaffordable. And while I certainly support strengthening county government to reduce costs at the local level, you know there isn’t enough money or support there to find a billion dollars. But regardless, any income tax reduction that is replaced with revenue from sales or property taxes means middle-class families pay more.

Phil: But they will only pay based on what they spend. If they can’t afford it, don’t spend it. Plus, they’ll have more money in their pockets, since they don’t have to pay income tax. Think New Hampshire. They operate without an income tax (or a sales tax), and their residents aren’t fleeing.

Ethan: First of all, New Hampshire is literally 25 percent our size (fewer roads to maintain, less environment to keep clean, smaller towns to patrol, etc). Secondly, they charge property taxes at both the state and local level, making their property tax burden the third highest in the nation. Lastly, don’t let anyone fool you into thinking they don’t have a sales tax. They call it a “use tax,” and it is higher than ours! That’s why their tax system is one of the most regressive in the nation. The less you earn in New Hampshire, the more of your income you pay.

Phil: Another opportunity to think creatively. If we can find ways to show former Mainers and entrepreneurs our four seasons, clean environment, crime-free neighborhoods, deep-water ports, uncluttered airspace, superb telecommunications and a tax policy that puts New England on notice that Maine is the place to be, they will come.

Ethan: Well, if you don’t gut the state budget or pass the economic burden onto the middle class, we’ll be able to show those things. Unfortunately, eliminating the income tax and jacking up the sales tax just won’t get the job done. But I do appreciate the effort.


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