Legislators must support L.D. 1655 to create tax conformity for Maine businesses. Without this bill, there will be an egregious inconsistency between federal and Maine tax laws. Businesses will have to keep two sets of books; one for state depreciation and another for federal depreciation. Maine’s businesses are already paying the highest tax rate because as pass-through entities, their income (aka “profit”) is reported on the owner’s personal tax return.

This bill would also enable our businesses to implement the recently enacted federal tax change, which includes a 100 percent bonus depreciation to fully expense the purchase of many upgrades and assets up front, rather than over a delayed period of many years.

This is an invaluable investment tool that will allow businesses such as paper mills, farmers and lobstermen to purchase costly equipment and expense it in the first year rather than over the expected life of the equipment. A larger, up-front write-off allows businesses to expand to run the new equipment, hire and train the people to run the equipment and invest in many other necessary upgrades.

Because of Maine’s high income tax rate (relative to 5 percent in Massachusetts and 0 percent in New Hampshire), Maine businesses will get the worst end of both tax policies: an expanded base of taxed income on the federal side, and a high tax rate without the expanded bonus depreciation on the state side. If other states conform, future business owners have good reason to not move to Maine, and those here will have good reason to leave.

Please find a compromise on or amendment to this bill, which supports Maine businesses, hardworking people who provide thousands of jobs and a much-needed tax base.

Cathy Nichols

Republican candidate, Maine House District 43

Falmouth


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