The proposed state budget for 2016-2017, if enacted, will cut personal income tax to 5.75 percent from the current 7.95 percent. It will also raise sales tax to 6.5 percent from the current 5.5 percent.

These two initiatives will not, as Gov. LePage has said, help the economy grow because of their “business-friendly” qualities. What they will do is shift the burden of taxation to Maine’s poorest residents.

If the income tax is cut (and LePage says a reduction to 5.75 percent is only “a start”), citizens who are most able to pay their taxes – employed citizens – will catch a break.

Conversely, citizens who are least able to their pay taxes – unemployed and disabled citizens – will suffer in that they will have to pay for rising sales taxes.

Proponents of this reform say that citizens will respond to a reduction in their income tax by spending more money. This, in turn, will stimulate the economy.

Proponents might also say that if citizens are working, they deserve a break in their taxes. But the break levied with the reduction in the income tax will be counteracted by the increase in the sales tax. So income-earning citizens will largely break even, and non-income-earning citizens will have to shoulder a new burden without the counterweight (income tax cut) to balance it.

LePage’s new two-year budget for 2016 and 2017 is about the same size as the current two-year budget ($6.3 million). So, while LePage claims that his reform will eventually save Maine money, over the next two years it will only hurt the unemployed and disabled.

Daniel Kelly

Portland


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