Jonathan Cimmins

Jonathan Cimmins

The timeless children’s song tells us that the wheel on the bus go ‘round and ‘round and while that may be true as the bus travels through town it could also be true as the bus travels down the Turnpike. Rambling down the road, filled with thousands of Mainers looking to avoid some of the highest income tax rates in the nation.

Maine’s Question 2 on next month’s ballot asks us if we want to establish a fund to advance public education from kindergarten to grade 12. The fund would be developed by placing a 3 percent tax on incomes for those people who earn more than $200,000 and earmarking the money to supplement the general purpose aid for education that the State currently funds. Maine currently funds education in the state to the tune of nearly a billion dollars per year.

Who could not support this? This fund was developed to help bridge the gap that some schools make up in their educational funding with property tax increases. The problem though, lies with the details and the way the new funds are arrived at with the proposed language for the referendum.

Currently, Mainer’s who are subject to the top marginal rate for income tax pay a rate of 7.15 percent per year. Under this proposal those income tax rates would jump to 10.15 percent. Maine would have a rate that was twice what is paid in Massachusetts. What would be the incentive for someone to live in southern Maine as opposed to living and working in New Hampshire or outside of Boston?

I spoke to an attorney who is aware of current tax law and the ramifications of changing the top marginal rates on some Mainers. His concern was squarely placed on how this proposed law would affect the thousands of small businesses in Maine. Those small businesses make up the majority of Maine’s workforce.

For the LLC’s and the S Corps that comprise Maine’s small business environment, their income is factored into their owner’s personal income taxes. Those business incomes will also be taxed at the higher rate. Those business entities will now no longer be as profitable as they could be and therefore may not have the funds to grow and employ other Mainers. This is a case where simple addition leads to subtraction.

The net impact on job creation, if the referendum passes, could be to slow growth and cut the number of jobs. We need job creators and entrepreneurs to come into the state. We do not need them to be scared away by a tax policy that penalizes their success in a name of increased funding for education.

Another aspect of this referendum that has been contested is who gets the money? The funds are to be used to supplement the general aid given by the state. Now, given our current funding formula for state education spending, this leaves a great deal of interpretation as to who gets what dollars. Larger, wealthier districts could be at an unfair advantage over districts that do not have the same resources. This referendum could actually end up making the education disparity between districts worse in Maine, not better. Brunswick, Cape Elizabeth, Scarborough may benefit, but what about the children in towns like Rumford, Mattawamkeag, Dayton and the like?

In a state that desires younger people moving into the state and bringing their income potential with them, this seems like the wrong path to set us upon for increased funds for education.

I think most people support educational funding as long as the funding is fair and serving a purpose. For our children to benefit from their education there must be good paying jobs that exist for them to move into once their schooling is done. This referendum may very well cause those businesses to locate elsewhere. It will also certainly cause young professionals who are looking to start their careers in Maine pause to do so.

If Question 2 passes I fear that Maine’s population will only continue to get older and smaller. The number of small business jobs that exist right now will also shrink. Let’s open Maine up and be as welcoming as we can for those who want to grow a business or start a practice. Let us also give all Maine children the chance to succeed without picking winners and losers based on a paycheck.

That’s my two cents…

Jonathan Crimmins lives in Brunswick and can be reached at j_ [email protected]

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