April 23, 2013

Legislators scrutinize Democrats' tax ideas

Republicans stand firm against rate hikes for the wealthy as a week of hearings begins in Augusta.

By Michael Shepherd mshepherd@centralmaine.com
Staff Writer

AUGUSTA — A legislative committee began a week of hearings on tax proposals Tuesday by previewing Democratic alternatives to measures in Gov. Paul LePage's proposed budget for the next two years.

House Majority Leader Seth Berry, D-Bowdoinham

Contributed photo

While liberal groups support four Democratic proposals to adjust Maine's tax code, Republicans are mostly standing firm, saying government must cut spending before raising taxes, even on high earners.

The proposal with the most legislative clout is a concept bill from House Majority Leader Seth Berry, D-Bowdoinham. Senate President Justin Alfond, D-Portland, and Speaker of the House Mark Eves, D-North Berwick, are co-sponsors.

It would impose an assessment on those with annual income of $350,000 or more if their effective income, sales, use and property tax rate falls below a threshold set by Maine Revenue Services.

The bill seeks to bring the state $150 million to $250 million in new revenue while making Maine's tax system fairer.

Democrats have decried changes pushed by Republicans in the state budget that passed in 2011. While the changes removed 70,000 low-income Mainers from the income-tax rolls, they reduced the state's top income tax rate from 8.5 percent to 7.95 percent and raised the threshold for estate tax exemptions.

"When the struggling full-time worker has a little more money in their pocket, businesses like mine have more customers," said Berry, a vice president of an environmental testing company, before the Taxation Committee.

Other Democratic proposals heard Tuesday include measures to raise the top income tax rate -- two proposing 8.5 percent and one proposing 10 percent.

In testimony Tuesday, Garrett Martin, director of the liberal Maine Center for Economic Policy, said reluctance to raise taxes on high earners is "effectively a strategy to ensure that we make it more difficult for young, hardworking families to succeed in this economy."

But Linda Caprara, a lobbyist for the Maine State Chamber of Commerce, said the chamber hears "all the time" that high personal income tax rates hamper companies' recruitment efforts.

Adam Lee, a frequent contributor to Democratic political causes and the chairman of Lee Auto Malls, a chain of Maine car dealerships, told a different story. 

"I don't know anyone that would leave Maine over his or her tax rate," he said.

Republicans and Gov. Paul LePage have said they will try to protect their income-tax changes. In a statement Tuesday, House Minority Leader Kenneth Fredette, R-Newport, said Democrats are "laser-focused on forcing Mainers to open their wallets and enable big government overspending." 

On Tuesday, an exchange on the committee perhaps best summed up the impasse on taxes between the parties.

At one point, Rep. Matthew Moonen, D-Portland, told Caprara "taxes are going to go up."

"So is it income taxes, property taxes (or) sales taxes?" Moonen asked.

Just after that, Sen. Douglas Thomas, R-Ripley, said, "I don't think taxes do need to go up. I think there's a third alternative no one wants to talk about, and that's cutting expenses." 

Michael Shepherd can be contacted at 370-7652 or at:

mshepherd@mainetoday.com

On Twitter: @mikeshepherdme

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