June 11, 2010

Harmon: Maine turns a corner,
but which way will it go?

A surprisingly large majority ditched a tax reform that didn't lower taxes. What will they do for an encore?

By M.D. Harmon mharmon@mainetoday.com
Editorial Writer

So, the primary's over, and my predictions held true.

But, you say, I didn't make any predictions? Ah, you didn't hear the ones I whispered under my breath in the newsroom when my coworkers were discussing the campaign.

Or, you weren't present at the editorial board meetings where I held out (in vain, but that's nothing new for a media conservative) for the guy who won the Republican nomination for governor and the position that carried the day (by a 60-40 margin, no less) on repealing the Democrats' dog's breakfast of a "tax reform" law.

I guess losing the internal debate and seeing the election go my way is more than a fair trade, but in this post-primary, pre-November hiatus, a look back might be a good way to set the stage for a leap forward.

First, Question 1. I figure the Democrats just couldn't help themselves. Having first correctly diagnosed the problem, which is that the state's income taxes are unfairly and uncompetitively high, both in absolute terms and in comparison with other states with whom we compete for business, they started off with the right goal: bringing the rates down.

But once they lifted the hood, just changing the oil was just too darn simple for them.

They could have done all they needed to do by passing a law that said, "Dear Overtaxed Mainers: The top rate for Maine income taxes is now and will evermore hereafter be 5 percent. Love and kisses, your favorite Legislature."

But instead, they decided to fool with the fuel injectors, replace the alternator, remove the spark plugs and put in a new cooling system.

There was hardly a corner of the tax code they left untouched, including decoupling Maine's code from the federal one and capping the amount of "credits" that taxpayers could get for things like charitable contributions and medical costs. (That was a tax hike all by itself, but one the sponsors apparently overlooked.)

Then there was the exception that golf and skiing lobbyists (oh, and did I mention lawyers?) wrangled to prevent sales taxes from being levied on the services their precious businesses provided. Auto repair shops just didn't have that kind of clout, I guess.

Lord knows, if one of your goals is to soak tourists with "exported" taxes, hardly anyone from out of state comes here to play golf or ski, right? And if lawyers can't be exempt from taxes that lower-caste citizens must endure, they wouldn't be worthy of a J.D.

Anyway, Democrats let their inner policy wonkishness loose, and like an unhousebroken puppy, it piddled all over the tax code, leaving a mess for responsible adults to clean up.

Fortunately, Maine voters were up to the task.

But wait, you ask: Isn't cutting the income tax rate without raising taxes somewhere else going to produce less revenue?

The appropriate response is twofold: "Yes, at least in the short term," and, "So what?"

If the state has a short-term problem with revenues, maybe it should realize it never had any business trying to run a health insurance program, or provide Medicaid benefits far above the national average, or subsidize alternative-energy programs that are making some already rich people a whole lot richer.

Over the longer term, lower tax rates will bring in businesses that will improve state revenues. Anybody who disagrees has an argument not with me, but with Rep. John Piotti, a Democrat and the principal sponsor of the just-defeated law, who made that claim in multiple meetings with the editorial board. He and his fellow Democrats just couldn't leave well enough alone, however, and paid the political price.

Which brings us to the governor's race. It's interesting that, despite what appears to be a burgeoning campaign to tag Paul LePage with the dreaded epithet, "social conservative," his position page on his campaign website has precisely three sentences on such issues. They are the last things on the page, and are headed, "Traditional Maine Values" -- which they are.

Above them, however, are a long list of positions on "Budget Woes," including general assistance, tax policy and regulation, and education.

You can (and should) read them for yourself, but note that the first things on his tax policy list are "Reducing the personal income tax rate to a flat 5 percent beginning at a gross family income of $30,000" and "reducing the corporate income tax rate to a flat 5 percent beginning with a pre-tax profit of $30,000 to $500,000 and to drop the rate over $500,001 to a flat 4 percent."

Those are directly aimed at the people who voted down Question 1, and are also central to the tea party activists' goal of reducing government spending and tax rates.

It has been said, I believe accurately, that the biggest mistake President Obama and his congressional allies have made is "they have finally revealed the true cost of government to the American people."

Those multitrillion-dollar debts are what has spurred the tea parties, they are what's on the minds of millions of voters -- especially younger ones -- and they're what is creating support for candidates (potentially in both major parties) who pledge to slash the cost of government to sustainable levels.

Isn't "sustainability" something we're told to pursue in harvesting food and natural resources? So, why is it wrong to apply it to government?

I suspect a lot of voters, tired of watching spending rise through the roof, will be asking that question before Nov. 2. 

M.D. Harmon is an editorial writer. He can be reached at 791-6482 or at:

mharmon@mainetoday.com

 

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