The Maine House of Representative voted for a tax conformity measure that fully conforms to the federal tax code for the next two years and allows families and businesses to file their returns now. Unlike the proposal from Gov. Paul LePage, it also puts money into public education to protect classrooms from cuts and property taxpayers from bearing the cost shift.
Democrats and Republicans agree on federal tax conformity and the tax breaks it provides to homeowners, students, small businesses and teachers. Where we differ is the Maine Capital Investment Credit (MCIC), which is not part of the federal tax code but a program included in the governor’s version of tax conformity legislation. The Democratic version of the measure we voted for keeps it for the 2015 tax year so businesses have clarity as they file their returns. But after that we need to hit pause.
What is the MCIC? It is the state’s version of bonus depreciation for capital purchases in excess of $2.5 million in a given tax year. Without the MCIC, companies will still be able to deduct the entire cost of such purchases; however, it will occur on a normal schedule rather than the expedited schedule as prescribed in the governor’s proposal.
How many Mainers can say they received a job in 2015 because a multi-state corporation received expedited bonus depreciation? On the other hand, how many Mainers can say they received a property tax bill in 2015 that was higher than the year prior? How many folks are paying more in monthly rent than they were last year?
I talked to thousands of folks in Biddeford and I can confidently say they are not interested in higher property tax bills or higher rents in the coming year. Therefore, instead of using hardworking Maine families’ money to continue an unproven tax credit for multistate corporations, I am wholeheartedly supporting the proposal that extends Section 179 (a small business tax break) in accordance with federal tax code. I am supporting a proposal that adopts federal provisions like the Child Tax Credit, American Opportunity tax credit, earned income tax credit, and deductions for teachers who buy school supplies with their own money. We recently learned 133 school districts across Maine are facing decreases in state funding. Property taxpayers in affected communities would have to come up with $23 million to keep schools funded at current level. Our legislation provides $23 million to public education. If we do this, Biddeford would receive an estimated $500,000 to fill the crater in its school budget for the upcoming year.
This State House debate about a big business tax incentive is taking place as the students at career and technical schools across the state – 27 of them, in fact – from Frenchville down to Sanford are making do on aging equipment. They wait to the last hum from a piece of equipment before replacing it, if stressed school district budgets even allow that. These are the same young people who will form our future workforce but they are learning on equipment that fails to reflect the equipment being used by Maine businesses.
If Republicans and Democrats stand together and do this – and two Republicans and two independents already have – we can relieve the pressure on municipalities to close the gap by raising property taxes on folks like you. And by the way, businesses, both big and small, pay property taxes too.
I am convinced it is time to put students, teachers, small businesses, and property taxpayers before the MCIC. I am going to stand by the Democratic proposal that closes the education gap, that subsequently prevents the need to close this gap with property tax hikes, and extends Section 179 and other tax incentives to help Maine-owned and Maine-operated small businesses.
My Republican colleagues argue that the large multi-state corporations need the predictability of having the MCIC. I ask them, “When will property taxpayers receive the predictability of knowing that they will not be hit with another hike?” It is time to put our money where it came from – back in the pockets of Maine homeowners and small businesses.
— Rep. Ryan Fecteau, DBiddeford, is a first-term legislator who serves on the Labor, Commerce, Research and Economic Development Committee.
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