August 21, 2011

LePage seeks boost for retirees by ending pension taxes

Lawmakers will consider the proposal, but caution that it's a difficult time to lose the revenue.

By Susan M. Cover
State House Bureau

(Continued from page 1)

$11 million to exempt military pensions.

$55 million to exempt private-sector pension income.

If the tax were eliminated on all of the sectors, it would cost $93 million and reduce taxes for 75,000 people, Allen said.

LePage's spokeswoman Adrienne Bennett said in a prepared statement that the administration considers the issue "a top priority" as it looks to prepare a supplemental budget for consideration by lawmakers. The administration is still working out the details of what the proposal would entail.

"The bottom line is, we don't want people leaving our state," she said in the statement.

Independent Sen. Richard Woodbury of Yarmouth, a member of the Legislature's Taxation Committee, said the state already exempts various groups, which drives up taxes for everyone else.

However, he does consider it to be a problem that some retired Mainers claim residency in other states.

"My instinct on how to address that would be to bring our overall tax rate down across the board," he said.

Earlier this year, the Legislature voted to lower the top income-tax rate from 8 percent to 7.95 percent. Woodbury said the state could spend $93 million to lower the rate again by another percentage point, and make a bigger impact on the economy.

Richard Rosen, R-Bucksport, Senate chairman of the Appropriations Committee, said he wants to keep the focus on job creation. He said he needs more information on how eliminating the income tax on pensions would help to achieve that goal.

State Treasurer Bruce Poliquin said a multiplier effect would spur the economy if retirees stayed here longer and spent more money in Maine on groceries, homes and cars.

"One of the things we've got to dig up data on is what kind of an impact will we get by keeping that capital here in Maine," he said.

At the town hall, LePage said that if lawmakers eliminate the tax on pensions, it will help state workers by offsetting reductions to their cost-of-living increases.

"But the only way we're ever going to get rid of the tax on pensions," he said, "is for the people in this room, and throughout our state, to call their representatives and senators and demand it."

MaineToday Media State House Writer Susan Cover can be contacted at 620-7015 or at:


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