Wednesday, December 11, 2013
By ORLANDO E. DELOGU
Recently, state Republican leaders have sparred in the state's daily newspapers with Democratic counterparts over who is responsible for lowering taxes.
Republicans seem to want to take credit for passing "the biggest tax cut in state history."
But, if things go badly, they want to share the blame with Democrats.
Let's be clear: Democrats did not initiate these tax cuts. They do not control the governor's office nor either branch of the Legislature. Republicans brought these measures forward -- they were the centerpiece of Gov. Paul LePage's budget address in February 2011. He characterized his budget as a "jobs bill" and sought over $200 million in tax cuts.
Republicans had the votes to pass whatever they wanted, and a governor ready to sign it into law. Democrats could do little more than offer alternatives, and marshal opposition to the governor's agenda.
A critical time period (allowing tax and budgetary matters to be decided by simple majority) passed in April 2011. It would now take a two-thirds vote to pass budget and tax cutting measures.
With this leverage, Democrats reduced tax cuts to approximately $150 million, and agreement was reached tempering the governor's welfare reform measures and reforms to teacher and state employee pension programs.
Was this an ideal bargain from the standpoint of Democrats, a truly bipartisan measure? It was not.
Did a number of Democrats nonetheless support the final bill? Yes. Some, no doubt, shared the view that tax cuts would create jobs. Others felt it was the best deal Democrats could forge under the circumstances. Still others believed that the governor had moved away from the draconian welfare reforms originally proposed.
Four months after passage of the governor's budget and tax cutting measures, Democrats were shocked by the stark welfare reform package the governor proposed to open the Legislature's second session. They felt that they had been bagged -- that the governor had reneged on express or implied promises made.
Whether Democrats were bagged, or simply naive, doesn't really matter. The fact is, the governor got (from Republican legislative majorities) most of the welfare reforms he sought. Whether he can sustain his welfare reform agenda in the face of federal resistance to these cutbacks remains to be seen.
The question of who gets credit (or blame) for tax cuts already enacted also seems irrelevant. But the debate does raise an important question that should be examined: Does tax cutting produce jobs? No evidence supports the assertion that it does. The assertion seems little more than a myth.
At the national level, from the Eisenhower era to the Clinton era, more than 50 years, we enjoyed job growth, generally low unemployment, and manageable levels of deficit. Federal income tax rates (personal, corporate, and capital gains) were far higher than they are today. Republican tax mythology, which began under Reagan and reached a peak under George W. Bush, has resulted in the lowest level of federal taxes in 60 years.
These low tax rates have increased income disparities in the nation; The rich are richer, while median household income has declined for over 30 years. More importantly, these low tax rates did not ward off the recent recession; and renewal of Bush II tax cuts (at the insistence of congressional Republicans) has not stimulated the economy or produced significant job growth. The only thing tax cutting has produced is a growing federal deficit.
It is folly to believe that tax-cutting myths that have not worked at the federal level of government will somehow work in Maine. They haven't. State unemployment is where it was a year ago, 7.6 percent -- significantly higher than unemployment in Vermont, New Hampshire, and Massachusetts.
In short, LePage's tax cuts have not stimulated Maine's economy; there is no job growth.
Maine's tax cutting seems little more than a deliberate effort to create a budget crisis intended to force state government to further reduce programs and spending. It's a manufactured crisis, an abdication of historic state duties and responsibilities designed to shrink the size of state government.
We must ask ourselves: Are Maine people better off with these contrived tax reductions and spending cuts? It seems we are not.
Essential human needs are not being met, our infrastructure continues to deteriorate, the effects of recession are prolonged.
It's time for Maine voters to say, "Enough." We deserve more responsible state tax and spending policies.
Orlando E. Delogu is emeritus professor of law at the University of Maine School of Law.