May 21, 2010

Maine Voices: Repeal of tax bill will keep Mainers from paying higher taxes

The state has confirmed that top-level earners will pay less and everyone else will pay more.

By DAVID TRAHAN

WALDOBORO — Supporters of the so-called tax reform legislation coming up for repeal in Question 1 on June 8 have released two television ads that blatantly mislead voters.

ABOUT THE AUTHOR

Sen. David Trahan of Waldoboro, a Republican, is currently serving his first term in the Maine State Senate. He can be reached at dptrahan@roadrunner.com or 207-691-0367.

These ads are essentially a commercial version of "We're from the government and we are here to help you."

Let me get right to the point: Virtually every person in the state will see an eventual income tax increase under this legislation -- that is except the super rich.

One hundred percent of Mainers will pay higher sales taxes; don't be fooled, you will pay more in taxes -- not less.

Don't take my word for it, the good folks that collect your taxes, Maine Revenue Services, have put together some great information that details your new tax bill.

1. Do you want 102 new taxes? If you want more taxes, then you will love this new law. In fact, you will have 102 reasons to be happy, because that's how many new categories of items will be added to the sales tax.

2. Do you want higher income taxes? A Maine Revenue Services report predicts 81,000 Mainers will pay significantly more taxes if this law is not repealed. In addition, for all income taxpayers, from 2011 to 2014 indexing of the income tax brackets disappears.

Indexing is the equivalent of a cost-of-living adjustment and has been in effect since 2002. Loss of indexing means every single income taxpayer will have an average income tax increase of $30 to $50 a year for four years. That's another $8 to $12 million a year coming out of taxpayers' pockets.

3. Should the elderly and folks on fixed incomes pay more? Maine Revenue Services estimates at least 112,000 elderly Mainers on fixed incomes will pay more in sales taxes. Of course, "It's only $5.7 million."

The only way to stop this is with a "yes" vote in June on Question 1.

That's right, vote "yes." A "yes" vote repeals the new taxes.

4. Do you understand the fine print? Supporters of the tax shift law argue their bill lowers the highest income tax bracket from 8.5 percent to 6.5 percent; this point is true and most likely the justification for their television advertising saying tax rates would rise with repeal.

But to be more far more accurate, what supporters of tax reform should have said was, "Repealing the law stops tax cuts for the richest 5,000 people in the state." That would be truth in advertising.

As Maine Revenue Services confirmed this week, for the year 2013 a group of less than 5,000 taxpayers earning more than $340,000 will get a net tax cut of $34.3 million.

For the other 99.3 percent of Maine taxpayers, while some might see a small tax reduction, overall they will have a net tax increase of $8 million if this law is not repealed.

While it is true that each income category has winners and losers, this is a seismic shift of tax burden to benefit a tiny group of Maine's super-rich.

This windfall for the wealthy is apparent when reviewing the flow of money into the campaign coffers of the folks who are running these misleading television ads. From the very beginning, they have received funding from two major sources: lawyers and corporate executives.

Campaign finance reports filed with the State Ethics Commission, show the leading Political Action Committee for higher taxes, "Leaders for Maine," received money from the vice president of Hannaford, Unum Corp., Clean Power PAC, TransCanada Hydro, AT&T and three law firms. Just recently we learned Connecticut tycoon and hedge fund manager Donald Sussman gave them $100,000.

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