By Senator David Trahan and Representative Jonathan McKane
Most working people agree: Maine's taxes are still too high. Over the past several decades, we have seen little more than lip service paid to the pleas of the people for a real tax break. Last year's tax reform plan was overwhelmingly rejected by voters in a people's veto by a landslide margin of 61 percent. Voters figured out that it actually would have increased revenues to the state. That could hardly be called tax relief.
A new Republican tax reform proposal that actually cuts taxes citizens is now before us. It is a sweeping plan that makes permanent structural changes to Maine's tax system. This recently released proposal fairly distributes $203 million in desperately needed tax relief over two years.
The plan calls for the elimination of the 2 percent, 4.5 percent and 7 percent tax brackets and lowers the top rate of 8.5 percent to the governor's recommendation of 7.95 percent. These changes would leave two brackets, 6.5 percent and 7.95 percent. In addition, our plan calls for conforming the personal exemption and standard deduction to the federal standard. A family of four electing the standard deduction will be able to earn as much as $35,750 a year before paying any state income taxes - up from $21,400 under current law. That's 67 percent increase in tax-free income.
With these changes, 70,000 Maine low-income families will no longer have any state income tax obligation. Critics have charged that this is tax cut for "the rich," but in 2012 all Maine families will see an average tax cut of $243 dollars. In 2013, the average tax cut will be $343.
And our plan does much more:
* It makes changes that allow small business to accelerate depreciation on new or used equipment with a value of $500,000 or less.
*It establishes a sales tax holiday each year exempting purchases up to $1,500 from the sales tax. The rising cost of food and fuel is consuming paychecks and we want to give Maine residents a hand up before winter on purchases like clothing and appliances.
*We eliminate the 7 percent tax now charged on meals in retirement facilities. This expensive tax has been a nagging burden on Maine's seniors for years.
*We eliminate the sales taxes on fuel for groundfishing boats in the Gulf of Maine. With this change, thousands of pounds of groundfish will now be landed in Portland instead of Massachusetts, reinvigorating the Portland Fish Exchange.
*We eliminate the new requirement by Maine Revenue Services that Maine Redemption Centers collect sales taxes on containers used to transport bottles and cans. This change will save small businesses and jobs across our state.
*We eliminate the much-despised Alternative Minimum Tax.
*And we double the death tax exemption from $1 to $2 million and establish a new rate structure. The change is desperately needed to save Maine farms and small businesses.
Maine Republicans understand state workers want to lower taxes, too, and we plan to work with them to build a more efficient state government. Just recently the MSEA delivered a report to the governor and the Legislature with 3,000 recommendations on ways to save money in state government. They plan to conduct another survey to solicit a new round of ideas. We will work with them to create a formal process to implement their recommendations within the Legislature's Office of Program Evaluation and Government Accountability.
State government always finds enough revenue to fill a budget shortfall. And there always seems to be enough to expand a government program. Yet somehow, when it comes to helping Maine workers, families and businesses keep more of their hard-earned dollars to spend the way they want, there are always excuses why we can't do it, even after witnessing the wasteful spending scandals like those at the Maine Turnpike Authority and the Green Energy Alliance.
It's time to stop the excuses. The naysayers need to join us in getting the job done. We have created a fair and reasonable plan.
Senator David Trahan and Representative Jonathan McKane both serve in the 125th Maine Legislature.