Tuesday, May 21, 2013
Now, if you multiply that example 100 million times, you get the benefits under the tax reform plan currently being debated in Augusta.
By enacting this legislation the state will ensure that nearly all Maine people pay significantly less in taxes.
The revenue-neutral plan, which had a public hearing last week, will put $100 to $500 more in the hands of the average Maine person. That is $75 million residents will not have to pay.
In addition to putting several hundred dollars more in your pocket, it will make the state budget more predictable reducing the likelihood of large deficits and the painful cuts that accompany them.
Equally as important, it will make Maine a better place to do business. Nearly all of Maine's small businesses will pay less in income taxes and will have more money to reinvest in growing their business, hire more employees or give existing employees raises.
So how will the state reduce the tax burden of Maine people so significantly? The proposal cuts the income tax rate by more than 20 percent, from 8.5 percent to 6.5 percent, and establishes a series of refundable tax credits that will lower most people's tax burden even further.
To pay for the income tax cut, the plan proposes to extend the sales tax to a few areas that will be paid in large part by tourists and modestly increasing the taxes on rental cars, meals and lodging.
Even after the expansion, Mainers will still pay taxes on far fewer items than in most states and our sales tax will still be far lower than the national average.
Now is the right time for the state to let people keep more of their paychecks. The national economic crisis is forcing working people across Maine to take pay cuts or work fewer hours, squeezing household budgets and all but eliminating discretionary spending for many families.
Most people could use an extra $100 to $500 to help pay the oil or electric bill, or maybe even take the family out to eat, go skiing or stay on the camping trip an extra day.
By putting more money in the hands of Maine people we can trigger spending that will help create jobs and stimulate the economy.
Our current income tax rate is so much higher than other states it discourages businesses from locating in Maine. When it comes to the income tax, Maine is such an outlier that we are at a competitive disadvantage.
Lowering the tax rate will help change the image of Maine as a place that is unfriendly to business. This plan will help erase that perception and entice more companies to locate here, which will in turn create jobs and opportunity for Maine people.
Lowering the income tax will also encourage retired people to become Maine residents. We all know people who own vacation homes in Maine who are residents of other states. If our income tax is lower than say, Connecticut, those people who live there but own property in Maine will have an economic incentive to become Maine residents.
With raises being a luxury most employers cannot afford, paying a few hundred dollars less in taxes will make a big difference for many Maine families.
Now is the time to reduce the tax burden on residents of our state and make certain that the economic benefits of $75 million extra stay with us during this difficult economic time.
Our state's future prosperity will be largely affected by the direction we take today, and this tax relief and reform package will be essential to ensuring that future.
— Special to the Press HeraldThe proposal cuts the income tax rate by more than 20 percent, from 8.5 percent to 6.5 percent, and establishes a series of refundable tax credits that will lower most people's tax burden even further. To pay for the income tax cut, the plan proposes to extend the sales tax to a few areas that will be paid in large part by tourists and modestly increasing the taxes on rental cars, meals and lodging.