Politics

March 12

LePage, critics spar over tax burden after report puts Portland in the U.S. Top 10

LePage says he reduced income taxes for low-income residents of ‘the liberals’ flagship city,’ but critics say revenue-sharing cuts raised property taxes.

By Randy Billings rbillings@pressherald.com
Staff Writer

A report this week by USA Today that lists Portland among the 10 U.S. cities with the biggest tax burdens has become the flash point for a debate on Gov. Paul LePage’s tax policy.

click image to enlarge

click image to enlarge

Portland Mayor Michael Brennan delivers his second annual state of the city address in Portland City Hall’s council chambers last month.

It also led LePage to call Portland “the liberals’ flagship city.”

The report, based on a study by the District of Columbia, ranked Portland seventh in the nation for its state and local tax burden. The city’s tax burden is relatively small for low-income residents but especially big for wealthier residents, USA Today reported.

The ranking is based on the combined cost of three state taxes – income, sales and auto excise – and the municipal tax on property. USA Today cited LePage’s efforts to reduce state income taxes but said other taxes, including the property tax, still add to Portland’s high burden.

LePage used the report late Wednesday to tout his efforts to cut income taxes for low-income families and to rebut claims by Democrats that his tax reform has benefited only the wealthy. He took a shot at Portland in the process.

“Maine liberals falsely label this historic tax relief as ‘tax cuts for the rich,’ ” LePage said in a written statement. “But, as this report points out, the rich in Portland – the liberals’ flagship city – pay more than their fair share, while low-income Mainers have enjoyed tax relief because of our income tax cut.”

WHO BENEFITED MOST FROM TAX CUTS?

Democrats responded quickly.

They pointed to a report by Maine Revenue Services that shows nearly 43 percent of the tax cuts adopted under LePage have gone to the top 10 percent of Maine earners. Taxes for the top 1 percent, who earned about $354,000 last year, were reduced by $2,810 while the 200,000 households that earned less than $20,000 received an average reduction of $17, the report says.

“Let’s not get distracted by the newest shiny object coming from the LePage administration,” Senate President Justin Alfond, D-Portland, said in a prepared statement.

House Speaker Mark Eves, D-North Berwick, noted LePage’s proposal to eliminate revenue-sharing with municipalities, a program that returns a portion of sales and income taxes to communities to reduce their reliance on property taxes.

“Last year, (LePage) tried to pay for (the tax cuts) by proposing one of the largest property tax increases in Maine’s history,” Eves said in a prepared statement.

LePage’s press secretary, Adrienne Bennett, did not return phone calls or an email seeking comment.

LePage never called for municipalities to increase property taxes to make up for reduced revenue from the state, although municipal officials said that would likely happen. Instead, LePage called on cities and towns to “tighten their belts” when he introduced his plan last year.

David Sorensen, communications director for the Maine House Republicans, issued a news release Thursday citing data from Maine Revenue Services showing that LePage’s tax cuts reduced income taxes by an average of $337 for about 460,000 households, and kept 70,000 Mainers from having to pay income taxes.

“The Republican-led tax cut package of 2011 is not slanted toward the rich, but does benefit all Mainers by providing real tax relief that puts more money into the pockets of hardworking Mainers and more money into the private sector economy,” Sorensen said.

A SLAP AT PORTLAND, AND A RESPONSE

The USA Today ranking is based on a report in December by the municipal staff in Washington, D.C., that was intended to help the district compare its tax burden to the largest city in each state.

The report looked at income, sales, excise and property taxes paid in 2012 by a hypothetical family of three, at five income levels. In Maine, all of those taxes are set by the Legislature with the exception of property taxes, which are set by municipalities.

(Continued on page 2)

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