Last week, we saw Gov. LePage appear before a joint session of the Legislature to defend his proposed budget and sweeping tax overhaul. Soon we will see people line up to tell the Appropriations Committee what they don’t like about it.

Before that happens, we’d like to say what’s in the package that we do like.

We continue to be supportive of tax modernization, which recognizes that Maine is a service economy, not the manufacturing economy that existed when the tax code was written.

Broadening the sales tax base, as the governor has proposed, and increasing the tax rate will collect more revenue from anybody who buys goods and services in Maine, including the 27 million people who come to the state every year and who never pay income tax. We should tax the economic activity that is going on right now, not wait for the industries that we once had to come back and pay the bills.

We are also supportive of the governor’s proposal to exempt $48,000 of income (for a family of four) from the income tax. Thousands of people who earn less would pay no income tax at all. Combined with a refundable sales tax credit for people on the low end of the income spectrum, low-wage workers would be able to get a refund check based on an estimated portion of what they have spent on sales tax, even if they don’t pay income tax.

And we like his approach to property tax relief, which targets assistance to individual taxpayers and not the town or cities in which they live.

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LePage would double the homestead exemption for people over 65 and put money into the property tax fairness credit, a program that replaces what used to be known as the circuit breaker.

Giving tax relief to individual homeowners who are paying a high proportion of their income in property tax keeps their tax burden low while letting communities effectively charge more to nonresident and commercial property owners.

No budget ever comes out of the legislative process looking like it did going in, but these are elements that we hope lawmakers will keep as they work out a deal. There is a lot to work with here.

Which is not to say that we like it all. We can’t support the governor’s laser focus on eliminating the income tax, which he insists is the ticket to economic growth. We believe that it is a recipe for future budget shortfalls, which would result in cuts to public services. Since most of the state budget goes to education and the Department of Health and Human Services, that is where the bulk of the cuts could be expected to take place. There is no magic to eliminating the income tax: Cutting taxes means less revenue, not more.

And we are concerned that this proposal would squeeze the middle class. Property tax payers under age 65 would lose the homestead exemption, hitting them with a tax hike that will be hard to make up with income tax cuts. And a loss of state income tax revenue that leads to cuts in school funding would indirectly force local school districts to get more from property tax payers.

We would like to see more of the revenue collected through a sales tax on service directed to targeted property tax relief.

That said, there appears to be enough to like in this package to form the outline of a good deal.

Exporting the tax burden, giving low-income workers a break and targeting property tax relief are the right principles. The hard part will be making the numbers work.


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