AUGUSTA – More than two months passed between when the LePage administration first issued its proposed biennial budget in February and when it advanced an updated version in early May.

More than two months to craft a more fair and affordable plan, and none has resulted.

The May “change package” makes clear that nothing has changed for the administration.

It has missed a golden opportunity to chart a new direction with its budget, a path that would have invested in our people and communities and strengthened property tax relief for at least 70,000 Maine taxpayers.

Instead, the administration continues to propose cutting taxes for the wealthy and paying for it by breaking promises to our retirees and reducing services and property tax relief for working Mainers.

Distributional analysis of the amended tax plan demonstrates how expensive and unfair the proposed tax cuts continue to be.

The top 1 percent of Maine taxpayers, those earning $356,608 or more, will receive 13 percent of the tax cuts, averaging $2,905.

Similarly, the top 10 percent of Maine taxpayers, those earning $117,914 or more, will receive 44 percent of the tax cuts, averaging $964. Making matters worse, 550 to 600 estates, all worth more than $1 million, will receive substantial tax relief because the exemption threshold will double from $1 million to $2 million.

In contrast, the bottom 50 percent of Maine taxpayers, those earning $35,269 or less, will receive 9 percent of the tax cuts, with the tax cut for the bottom 20 percent, those earning $14,427 or less, averaging only $9.

While the benefits primarily go to the wealthiest Mainers, the cost is paid for by all of us.

In the upcoming biennium, the proposed tax cuts cost roughly $199 million, which pushes the state’s projected revenue shortfall to approximately $1 billion.

Additionally, the cost of the tax cuts balloons to almost $400 million in the following biennium.

Unfair. Unaffordable. And the administration pays for these cuts by eliminating health coverage for 30,000 low-wage working parents and poor childless adults, ending prescription drug assistance for 40,000 seniors, and forcing state workers to pay more toward their pensions even though these same workers will receive lower annual benefits than retirees receiving Social Security.

Not only are the proposed tax cuts for the wealthy unfair and unaffordable, they are wholly ineffective as an economic development and job creation tool.

Experience and analysis by the nonpartisan Congressional Budget Office and many others demonstrate that tax breaks for the wealthy are the least effective at creating jobs compared to other options.

Investments in infrastructure and education, coupled with targeted tax relief for low-, moderate-, and middle-income taxpayers, are more effective at job creation.

The administration’s proposed tax cuts could actually be a job killer. One consequence of handing tax breaks to the wealthy by cutting critical investments is to shift costs to municipalities.

Cities and towns, left holding the bag of broken state promises, will have to consider raising property taxes and cutting jobs and services.

Everyone loses under this scenario, including teachers and municipal employees but especially the property taxpayer who will experience larger property tax impacts because of the administration’s proposal to scale back property tax relief by 20 percent for at least 70,000 Mainers.

In fact, some property taxpayers could see their property tax relief shrink by as much as $400, more than enough to offset any minimal income tax relief they might see.

There is a better way. Maintain protections for our people, especially our most vulnerable populations, and continue investment in the future: infrastructure, environment, energy, and education and training.

Provide targeted tax relief to Maine’s working families who can least afford to pay a disproportionate share of their incomes in taxes and who are likely to spend any additional income in the Maine economy.

Our budget reflects our collective economic priorities and societal values.

Unfortunately, the administration’s latest budget does not reflect our mutual aspirations and expectations.

Instead, it is rather a discredited and damaging view of economic theory that will likely hurt more Mainers than it will help.

The Legislature must find a more fair and balanced way to pass a budget that ensures a more sustainable and prosperous future for all Mainers.

– Special to The Press Herald

 

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