Hoping to piggyback onto a Republican tax reform victory in Congress, the Republican leader of the Maine House of Representatives is pushing for state income tax reforms that would match the federal bill expected to be signed into law by President Trump early in 2018.

Rep. Ken Fredette of Newport, who is running for governor in 2018, said Thursday that his bill is aimed at providing additional tax relief to working-class families and that his Republican caucus in the House will be pushing hard to cut the tax burden on all Mainers.

Fredette’s bill proposes two key changes to Maine’s income tax code – doubling the state’s version of the earned income tax credit, and creating a new child tax credit equal to the federal child tax credit.

The earned income tax credit helps income-eligible tax filers by reducing their total tax, but it also is refundable, meaning those who earn too little to pay taxes can still claim the credit and receive a payment from the government at tax time. The credit is based on income level and the number of dependent children a taxpayer has. Under current federal law, the maximum credit is $6,318 for a taxpayer with three or more eligible children. The minimum credit is $510 for a taxpayer with no children.

Current state law allows a taxpayer to claim 5 percent of federal earned income tax credit as a state income tax credit. Fredette’s bill would double that to 10 percent.



The new federal law also boosts the child tax credit from $1,000 per eligible child to $2,000 per eligible child. Fredette’s bill would mirror that same credit for state income taxpayers.

In Maine, 87,670 taxpayers claimed child tax credits on their federal returns in 2015, the most recent year for which data is available from the IRS. In the same tax year, 29,630 Maine taxpayers claimed the earned income credit on their federal returns, IRS data shows.

Legislative analysts have not yet prepared a fiscal note for Fredette’s bill, so it’s unclear how much revenue Maine would lose if the measure is passed into law.

Fredette said Thursday that other proposed changes to Maine’s income tax laws could be added to his bill as more details of the new federal law are rolled out.

“I think looking at tax relief at the state level will be a high priority for the House Republicans,” Fredette said. “There are going to be other aspects of this (federal) bill, as it gets rolled out we are going to have to look at other aspects of that to see where there are other issues where we can conform.”

The last time Maine lawmakers grappled with putting the state’s income tax code in line with the federal tax code was in 2016 when Democrats and Republicans disagreed over how long they should extend bonus depreciation tax credits allowed to businesses.


Rep. Ryan Tipping, D-Orono, House chairman of the Legislature’s Taxation Committee, applauded Fredette’s proposal, saying it’s something Democrats have sought for years.

“I’m glad Rep. Fredette has changed his mind and is now supporting an expansion of the EITC,” Tipping said in an email Thursday night. “Democrats on the Taxation Committee have been fighting for the exact same tax cuts for working families for years. It’s refreshing to see him come around.”


Fredette’s bill is probably only the beginning of Republican efforts to advance tax reform in the Legislature. Gov. Paul LePage has worked steadily to cut the state’s income tax, taking the top bracket from 8.5 percent when he took office in 2011 to 7.95 percent today. He has said his ultimate goal is to eliminate the state’s income tax entirely, offsetting some of the lost revenue by increasing and expanding the state’s sales tax.

But lawmakers, including many of LePage’s fellow Republicans, have resisted any sales tax increase.

Any kind of state income tax cut also would create a revenue shortfall in the state budget, and lawmakers in 2018 already will be struggling to figure out how to pay for an expansion of the Medicaid system, MaineCare, that was approved by voters in 2017. The state’s share of the expansion is projected to cost about $60 million a year by 2020, although Republicans have argued that figure might be closer to $90 million.


Fredette acknowledged the potential for a revenue shortfall Thursday, but said the cost of his bill would not be developed until after the Legislature reconvenes Jan. 3.

“That is one of the aspects that we will be looking at and certainly will be part of the conversation,” he said. “But you know we spent $400 million in new spending in this last budget, so I don’t have a problem having a conversation about how we can return some of those dollars to the taxpayers.”

Scott Thistle can be contacted at 713-6720 or at:


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