May 12, 2013

Two sides of reforming Maine taxes

Pro: A bipartisan plan would cut residents' taxes and improve our economy. Con: The irrational 'Gang of 11' proposals would make our tax structure less fair.

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Staff Photo Illustration/Michael Fisher


The Portland Press Herald/Maine Sunday Telegram wants to know what you, the readers, think about the tax reform plan proposed by the “Gang of 11.” Write to us by Wednesday, and we’ll present a representative sample of your views in next Sunday’s Telegram.

Letters may be emailed to (no attachments); faxed to (207) 791-6920; or mailed to: Letters to the Editor, Portland Press Herald/Maine Sunday Telegram, P.O. Box 1460, Portland, ME 04104-5009.

Letters should run about 300 words or less. Please include your name, address and daytime phone number for verification purposes.

In communities with very high tax rates, Lewiston for example, the savings are even larger -- an estimated reduction of $825 on a $100,000 home.

The income-tax provisions are anchored by a maximum 4 percent tax rate, the elimination of nearly all special tax breaks, and the creation of two "fairness credits" that would offset sales and property tax burdens.

These credits phase-out at higher income levels, so that only single filers with incomes over $60,000 or joint filers with incomes over $120,000 pay the full 4 percent rate. Everyone else pays less.

Lower-income families pay no income tax, and receive a refund check that offsets, at least in part, their sales and property tax costs.

The sales tax provisions are the easiest to dislike, because the rates are higher, and because most routine consumer purchases become taxable. 

The general sales tax rises to 6 percent, the meals tax to 8 percent, and the lodging tax to 10 percent. Many additional consumer purchases would become taxable, though the specifics still need to be defined.

To those critical of our plan, we ask -- what's the alternative? Sticking with the high property taxes we have now, and possibly raising property taxes even more? Sticking with a 7.95 percent income tax with an endless list of complicating special treatments for one purpose or another, but which discourages economic growth?

Rather than applying more duct tape to a failing tax system, we have put forward for discussion an alternative that we believe could be transformative for Maine's economy, Maine business and Maine people.

That's the plan of our "Gang of 11." We hope you will join us.

Sen. Dick Woodbury is an independent from Yarmouth; Sen. Seth Goodall is a Democrat from Richmond; and Sen. Roger Katz is a Republican from Augusta.


Mainers would be best served if tax changes are based on informed, sound tax policy. However, politics and the lack of understanding of tax laws by the vast majority of legislators, business leaders, economists and Maine voters have some praising a recent proposed "tax reform" plan.

In 2009, the Democratic-controlled Legislature passed a poorly designed "tax reform" plan that increased sales taxes and gave a large income-tax cut to the top 1 percent of Mainers. I worked with the Republicans and the Green Party to overturn the law with a June 2010 people's veto, which 61 percent of Mainers voted for.

One of the major supporters of the vetoed plan was the current "independent" Sen. Dick Woodbury, who is the driving force behind the new "tax reform" plan. Those who claim this plan is different are correct; it is significantly worse tax policy.

The uninformed press has categorized Woodbury as a moderate, but his tax policies are extreme. He is a strong supporter of the voodoo economic theory that tax cuts for the rich and corporations, paid for by tax increases on low- and middle-income taxpayers, is good economic policy.

Maine's tax structure is already significantly regressive and this plan will make it more regressive and unfair. Eliminating the estate tax and cutting the income tax in half results in a group of fewer than 5,000 taxpayers receiving a net tax cut of $45 million. The remaining taxpayers will have a net tax increase of $305 million.

The promoters of the plan estimate that the $700 million increase in consumption taxes (sales and excise taxes) will be offset with cuts to the property tax, income tax and estate tax, with a net Maine tax increase of $160 million.

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