October 25, 2013

Two sides of LePage: He sometimes offends, but his focus is unwavering

Maine Center for Public Interest Reporting

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Gov. Paul LePage has emerged as an anti-politician with his disdain for the sometime necessary tact required of political leaders.

Maine Center for Public Interest Reporting

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LePage responded by saying the ranking is a legacy of the years of Democratic rule. Glenn Mills, chief economist at the Maine Department of Labor’s Center for Workforce Research and Information, told the Bangor Daily News that “many of the reasons for Maine’s poor ranking by Forbes can be traced to its aging population, which affects everything from the available labor pool to wages.”

What do all the statistics mean?

“We are growing, but not as fast as we would like.”

That’s the assessment of James Clair. Clair is the chairman of the state’s Consensus Economic Forecasting Commission, the CEO of Goold Health Care Systems and a former non-partisan staffer to the Legislature’s Appropriations Committee. He holds a master’s degree in public administration from Syracuse University.

One area he sees “getting pretty strong” is personal income. Last year, Maine’s 3.4 percent growth in personal income was the slowest rate of any state and far below the national average of 5.1 percent. But the more up-to-date report by the federal Bureau of Economic Analysis tells a better story for Maine. While all but one state showed declines in personal income growth, Maine’s decline was among the smallest, ranking better than 31 other states.

Bottom line for Clair: “We’re having some growth, but it could be better.”

Chapter 4: Taxes -- Been Up So Long …

The left, the right and just about everyone in-between has long agreed on one thing about Maine’s taxes -- the income tax had to be fixed.

The main problem with it was that it treated working people like they were rich. The top 8.5 percent tax rate kicked in at an income level of $19,500.

In 2008, the Tax Foundation said Maine's 8.5 percent was the seventh-highest state income tax top rate in the country. It wasn’t long after that that Democrats, who had control of the Legislature and governor’s office, came up with a plan to lower the income tax rate.

Championed by Democratic state Rep. John Piotti, it called for a flat tax rate of 6.5 percent but a broadening of the sales tax to make up for the lost income tax revenue. Politically, Democrats would not support a plan that reduced state revenues and required cuts in spending.

It passed the Legislature and was signed into law by Baldacci, but voters killed the plan in a June 2010 referendum, its failure widely attributed to the sales tax hikes and to Gov. John Baldacci’s changes to the bill exempting some favored businesses, such as real estate and skiing, from the new sales tax.

State Sen. Joe Perry, D-Bangor, told AP the vote marked 40 years of failed attempts to reform Maine’s taxes, putting Maine at a competitive disadvantage with other states.

Then came another vote just five months later  -- the election of LePage, who in the recent interviews with the Center described his political philosophy: “I don’t define myself as a Republican. I define myself as a conservative, as someone who believes in self-reliance, smaller government – and only enough taxes to run the show.”

Now, the income tax problem was back on the table – and the timing was perfect. The Tea Party movement, founded on a visceral dislike of deficits and high taxes, scored successes on the national and state stage, including Maine.

LePage proposed what he hoped would be the first step in lowing taxes: take the top rate down from 8.5 percent to 7.95 percent. That became part of the governor’s first budget, and it was approved with votes from both parties.

His claim that it was the largest tax cut in Maine history, at $400 million, has not been refuted.

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