The only thing worse than taxes is tax breaks.

That seems as contradictory as Newt Gingrich saying fundamentalist Muslims are trying to turn the United States into a country of atheists. But unlike much of what Newt says, there’s a rational basis for my contention.

The amount we’re taxed by state and local governments isn’t determined solely by how much those entities spend. The tax rate is also influenced by what they decide not to tax. Every exemption, no matter how worthwhile, increases the bill for everyone who isn’t eligible for it.

You may think that doesn’t have much impact. Likewise, you may believe there’s an organization called Imams for a Godless America that supplies the text books for your high school’s government class.

In both cases, you are an idiot.

A 2010 study by the Maine Legislature found the state offers tax breaks – the bureaucrats call them “tax expenditures” to make it look less like they’re giving away your money – that total $6.6 billion. That’s more than the entire two-year state budget.

Advertisement

If all those sweet deals were eliminated, your tax bill would be less than half what it is now.

Well, not really. The net result of ending all tax exceptions is that you’d pay less one place and more another. If you’re a typical Maine resident, you’re almost certainly getting the benefit of some of these breaks: no sales tax on groceries and health care, no property tax on a portion of the value of your home, income tax exemptions for everything from mortgage interest to business supplies.

As a journalist, I can write off any expenses I incur in researching my columns, such as last Saturday evening’s beers (research into the drinking habits of god-fearing Americans) and an excellent Cuban sandwich (research into whether the embargo against Cuba should be lifted). Then there was the hotel stay (watching to see if any Secret Service agents checked in accompanied by floozies), the Portland Sea Dogs tickets for the following afternoon (trying to find out who Slugger is supporting for U.S. Senate), a steak-and-cheese sub (research into whether the Portsmouth Naval Shipyard could do repair work on something besides nuclear subs) and more beers.

I trust my accountant took note of the preceding paragraph and is even now notifying the Maine Revenue Service that it can forget about making anything off the $266.54 I spent on all that.

And right there is a fine example of what’s wrong with tax breaks; namely, that there’s no evidence that letting me deduct questionable expenses (oops, forgot the 8 bucks for dessert – research into obesity) produces anything of value to society (although, all the money I spend on beer is cash that isn’t secretly funding radical Islamists) or the economy (to tell the truth, I’d have bought those beers even if I couldn’t write them off on my taxes).

That’s also the trouble with virtually all the other tax dodges that exist. Whether it’s a tax increment financing deal saving a sandwich shop in Rumford $10,000 on next year’s property tax bill, questionable use of the Tree Growth Law so State Treasurer Bruce Poliquin avoids $30,000 per year in taxes on his land in Georgetown or Gov. Paul LePage’s shaky proposal to cut $93 million from the tax on retirement income, there’s nothing to indicate there’s any public benefit.

Advertisement

According to the Pew Center on the States, Maine joins about half the states in not doing enough to analyze the results of these government givebacks.

Did I say “not doing enough”? Sorry. Pew actually concluded Maine is “not meeting any of the criteria” for figuring out if tax-dodging Pine Tree Zones create jobs or the sales tax exemption for newspapers improves journalism.

According to Stateline, the Pew news service, a few states, notably Vermont, have begun examining tax breaks to see if they’re producing any quantifiable returns. But none has dared to go so far as to treat the money lost to these exemptions the same way it treats other spending – by making those who receive the gifts justify their existence with each new budget.

That would be politically risky, since it’s certain to annoy home owners, small businesspeople, beer-swilling journalists and Bruce Poliquin. But even if over 90 percent of these arrangements turned out to be of some public benefit, that would still leave more than $600 million that’s being handed out to those who don’t deserve it.

That’s enough to reduce taxes, build up the Rainy Day Fund, balance the human services budget and cover the cost of those “corrupt” state workers LePage is complaining about.

It’s time to take a serious look at all tax breaks, which must be why al Qaeda just sent me an email calling for an end to the tax exemption for churches.

Thanks to Capitol News Service for background used in this column. And also to the fine breweries that provided inspiration during the arduous writing process. And to the taxpayers of Maine for footing the bill. If you want to kick about that, email me at aldiamon@herniahill.net.


Only subscribers are eligible to post comments. Please subscribe or login first for digital access. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.