February 10, 2013

Beast of Burden

Maine's sales tax bites, and those it bites hardest are Mainers least able to pay. We can, and should, make our tax system fairer.


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Staff Photo Illustration/Michael Fisher

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Look again at the top 1 percent of Maine's non-elderly households where the average income is $703,200 per year. For these families the sales tax burden is barely noticeable. Their average monthly income -- $58,600 -- more than most Mainers earn in a year! The sales tax bite? About $500 per month. Boo hoo.

State property taxes are regressive too. In fact, the only progressive tax in the state is the income tax, but that's been undermined by recently enacted changes that reduced tax rates and lowered taxes. Aside from the nearly $400 million these cuts will cost in income taxes not collected (Gee, think this has anything to do with why the governor's proposing to balance the budget by eliminating revenue sharing?) this tilts the economic playing field even more in favor of those already occupying the most advantageous positions.

Why are we doing this? There are plenty of ways to make state taxes fairer. If, for example, we broadened the sales tax base to include financial services, the share paid by the state's highest earners would go up. If the Legislature cut property-tax giveaways to businesses by half (you know, the ones enjoyed by global, multinational corporations like Nestle and General Dynamics) there would be $200 million more in the state treasury.

But here's the real kicker. Making our tax system fairer would be better for everyone, including those at the top who'd see their taxes rise. Why?

Maine is the 12th most equal state in the nation. In more equal societies people live longer and they have better mental health. Income equality leads to stronger communities where children do better at school and are less likely to become teenage parents. When inequality is reduced, people trust each other more, and there is less violence. Everyone, as a result, enjoys a higher quality of life. More and more rapid economic growth is an added benefit of greater equality.

Out with the Sheriff of Nottingham. In with Robin Hood.

Susan Feiner is a professor of economics and women and gender studies at the University of Southern Maine.

A chart showing the relative impact of tax cuts based on income level was corrected at 8:55 p.m. Sunday, Feb. 10, 2013.

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