Monday, March 10, 2014
We all know that a growing economy creates more jobs for our fellow Mainers. That leads to better opportunities and fatter paychecks, and less government dependency and poverty. More jobs also generate more tax revenues to pave our roads, educate our kids, and care for the needy.
Our state government serves the people of Maine. It should do everything possible to help Maine families live better lives. It should do everything possible to help our businesses succeed and provide jobs, which grows the economy. This should not be a partisan issue.
Common sense and decades of data confirm that businesses and economies grow best when taxes are low, regulations are reasonable and predictable, energy and health insurance costs are affordable, and workers are well prepared. These conditions create a less expensive and less complicated place in which to conduct business. This, in turn, gives companies a better chance to succeed and hire more workers.
Wouldn’t it be terrific if Maine had an inviting business climate instead of being ranked 50th by Forbes Magazine?
Unfortunately, during the past 40 years, our elected officials in Augusta have adopted policies and enacted laws that make it costly and difficult to live and run a business in Maine. That’s why not one of America’s largest 1,000 companies is headquartered here, even with our clean environment, safe communities, and great outdoors. That’s why our young workers and their families leave for better opportunities elsewhere.
As the saying goes, nothing is certain but death and taxes. Rather than be strangled by high taxes, companies and their owners avoid them by locating elsewhere. Government spending determines tax rates. Overspending drives up taxes; less spending lowers them.
Take a look at the graph below showing Maine state government spending during the past 20 years. Spending has surged 88% while our population has inched ahead only 7%!
With that overspending, it’s no wonder Maine residents shoulder the 9th highest tax burden in the nation. In other words, we pay the 9th highest share of our mostly low-wage incomes for state and local taxes. Unless, of course, you’re a legal resident of Florida, New Hampshire, Tennessee, Texas, or one of the other nine states that imposes no state income tax. (Guess which states enjoy, on average, the strongest economies and job growth?)
In 2011, the Maine Legislature reduced taxes to help Maine families and their employers. That was an important signal to the business community that Maine was, finally, serious about becoming a more promising place to own and run a company. The national media picked up on this. Business owners pay attention to these developments.
Surprisingly, many of those same legislators who voted to lower taxes to improve Maine’s business climate are now pushing to raise taxes to pay for their overspending. It’s not fair to take more money from the pockets of our struggling families, especially during the worst recession in 70 years. It’s not fair to make it more difficult for our families to buy groceries to feed their kids, gasoline to drive to work and school, and home heating oil to stay warm. It’s not fair to discourage businesses from investing in Maine and hiring more workers.
Some legislators want the “rich” to pay more taxes to satisfy their overspending addiction. However, most wealthy Mainers have already changed their state residencies to avoid Maine’s high income tax and expensive energy and health insurance costs. There’s simply not enough wealth left in Maine for Augusta to tax its way out of the overspending mess that it created.
Instead, what if state government limited its size and stopped overspending? That would allow taxes to come down, enabling our families to keep more of their hard-earned money to make ends meet. Lower taxes would also provide incentives for entrepreneurs to risk their savings to start and/or expand businesses, thereby creating more jobs for our citizens. The resulting economic growth would generate more tax revenues to pave our roads, educate our children, and care for the most needy among us.
Let’s not unwind the progress made during the past two years to build a stronger economy and more jobs for our fellow Mainers. The business community, the engine of more jobs and more economic opportunity, is watching.
Bruce Poliquin is the former Maine State Treasurer and a 2012 Republican primary candidate for the United States Senate. He has 35 years of experience owning and managing businesses. Bruce is a proud third-generation Franco-American Mainer and Harvard University graduate. Visit BrucePoliquin.net for his most recent commentary and analysis on media outlets throughout the State about the important issues facing Maine families and their jobs.