May 11, 2013

Maine tax overhaul proposal meets stiff opposition

Critics focus on provisions that would either remove sales tax exemptions or increase excise taxes.

By Steve Mistler smistler@pressherald.com
State House Bureau

(Continued from page 1)

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Independent state Sen. Dick Woodbury, a Harvard-trained economist from Yarmouth, is the architect of the tax overhaul plan now before the Maine Legislature.

John Patriquin / Staff Photographer

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Others questioned shifting the tax burden from income to consumption taxes:

Albert DiMillo, a retired certified public accountant who frequently testifies on tax legislation, told lawmakers that the proposal would overwhelmingly benefit wealthy residents.

Garrett Martin, the executive director of the Maine Center for Economic Policy, a progressive group, said shifting to a system more reliant on sales taxes was less sustainable and could stymie Maine's economic recovery from the recession.

Martin said income taxes are expected to grow faster than other taxes. Cutting income taxes, he said, "is like selling an asset just as it is about to increase in value."

Sen. Doug Thomas, R-Ripley, blasted the bill, saying he would oppose it "with all that's in me." Thomas said the property tax relief would disproportionately benefit communities with higher tax rates. Thomas also criticized the bill for proposing to tax groceries and heating oil.

Proponents of the bill argue that a significant tax credit for low- and middle-income individuals and families would moderate, if not erase, the regressive impact of higher sales taxes and taxes on items such as groceries and oil.

Meg Gray Wiehe, state tax policy director for the Washington D.C.-based Institute on Taxation and Economic Policy, told the Press Herald that the proposal's tax fairness credit has "more potential than anything I've seen to truly offset the impact of the sales tax changes on low- and middle-income households."

Woodbury estimates that a proposal to increase the Homestead Exemption from $10,000 to $50,000 would yield an average property tax reduction of $500 and more in communities with higher tax rates.

Geoff Herman, representing the Maine Municipal Association, said it had analyzed the impacts and found that Maine property taxpayers will see an average reduction of $500 in their tax bills.

Herman also provided a detailed town-by-town analysis estimating the impacts of the homestead exemption. According to the analysis, a property taxpayer with a $200,000 home in Portland would see a $643 decrease under the proposal, and an Augusta homeowner with a $150,000 house would see a $577 reduction. There would be a $723 reduction for a $200,000 home in Yarmouth and a $773 reduction for a $150,000 home in Lewiston.

Herman said the provision in the bill to increase the homestead exemption to $50,000 would ensure that increased revenues generated by the proposal would go to property taxpayers. Herman cautioned that municipalities would lose some discretionary spending authority as a result of the targeted spending.

The bipartisan group of lawmakers were prepared for the opposition.

"Passing this bill will not be easy," Sen. Roger Katz, R-Augusta, said in a statement. "Each political party is wary, but we can make this happen." 

Steve Mistler can be contacted at 620-7016 or at:


Twitter: @stevemistler


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