During my years in the Legislature, I served on the Taxation Committee. As a member of that committee, I learned that decisions about tax policy must be made with great deliberation to avoid unintended consequences.

I was reminded of how just how complicated tax policy can be when catching up on proposals being discussed by congressional Democrats. Their goal of asking the wealthy to pay more may be fair at a time of growing inequality, but their plan to double the top tax rate on dividend income could hurt more than it helps.

Research on taxation and dividend payments is clear. When taxes on dividends go up, dividend payments go down. Why does it matter? Most dividend payments are made to seniors and the middle class. In 2018, for example, more than half of dividend payments went to taxpayers earning less than $100,000, according to Internal Revenue Service data. If Congress raises taxes on dividends later this year, seniors and middle-class savers see less dividend income, even if tax increases are focused on high earners.

The dividend tax is an example why tax legislation must be written with care. In this case, the goal may be to tax the rich, but the pocketbooks of seniors will also take a hit. As Congress works on its tax bill, let’s hope Sen. Angus King asks the Democrats who he caucuses with to pause and reject a dividend tax increase that hurts Maine’s seniors and middle class.

Donald Marean
Republican state representative, 2008-2019; independent state representative, 2019-2020
Hollis

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