For Immediate Release
To the Kennebec Journal and Morning Sentinel
By Rep. Susan Morissette and Sen. Tom Martin
We were surprised and startled by a recent column by Rep. Seth Berry, published in mid-August by the Maine Today dailies. The headline in the Kennebec Journal was as subtle as a sledgehammer - "Largest tax shift in Maine history puts big hurt on working families." The column contains wild distortions and blatant fabrications.
Just a week earlier, on August 8, three Maine Today newspapers published a "Truth Test" regarding claims in Democrat TV ads. Those ads targeted, by name, five Republican state senators who voted for the biennial state budget, which contained a tax reduction package. Although Democratic legislators voted overwhelmingly for the same bill, they decided that a smart election strategy was to turn about-face and blast the tax reductions as "tax cuts for the rich." Their hope, clearly, was to fool Maine residents.
The newspapers judged the TV ads to be a "half-truth." To make their point, they reported that when the tax cuts are fully enacted, the top 10 percent of taxpayers will "shoulder a higher percentage of the state's income tax burden; the rest will shoulder less." They stressed this fact by stating, "Maine's income tax is more progressive because of the changes."
Now that the tax changes have been validated as weighted in favor of the poor and middle class, Rep. Berry's new angle is this claim: "Due to many tax measures passed by the majority, the few making $350,000 will receive an income tax cut of $3,000. In future years, this windfall will increase to more than $21,000 per year."
What he did with this claim was combine two new laws - the budget and LD 849. As a member of the Taxation Committee, he knows better. His intent is to confuse readers.
The income tax cuts take effect in 2013, and nearly all Maine households will see higher take-home pay. In contrast, LD 849 is unlikely to affect anyone for a decade or more - indeed, if ever.
LD 849 is a "trigger" bill. It alters the way surplus state revenue is dispersed. After all state obligations are met, surplus revenue is filtered through a series of funds called the "cascade." The last "catch bucket" in the cascade is the "income tax relief fund." Under this new law, surplus funds would gradually lower the state's income tax rates.
According to Maine Revenue Services (MRS), the state would need a surplus of $200 million, of which 20 percent would then be used to automatically lower two of our three remaining tax brackets (0 percent, 6.5 percent and 7.95 percent). The total reduction in that scenario would amount to two-tenths of 1 percent. Such a surplus is highly unlikely. Rep. Berry ignores this fact and pretends LD 849 goes operational very soon - again, to trick readers.
In order to give "the rich" the $21,000 tax cut Rep. Berry claims, MRS estimates state government would have to experience a surplus of $3 billion. Considering the entire state budget is $3 billion, this claim is laughable.
Rep. Berry continues his distortions with claims that cuts to towns and property tax programs will cost "homeowners and renters more than $400 apiece." Naturally, he blames Republicans, but he left out some crucial facts.
Municipal revenue sharing - money sent to towns - was not cut in dollar terms this session. In fact, it went up. The big cuts actually occurred in fiscal years 2008, 2009 and 2010. Revenue sharing during those years fell steadily from $133 million in 2008 to $97 million in 2010. It bottomed out at $93 million in 2011, the last budget year of the Baldacci administration.
In 2012, by contrast, revenue sharing increased to $96.9 million and in 2014 is scheduled to reach $141 million. Republicans stopped the bleeding and, for the first time since 2008, increased money going to towns.
In sum, the harshest cuts to revenue sharing were implemented under Governor Baldacci in LD 353, (Public Law 2009, Chapter 13), which Rep. Berry supported as a member of the Democratic majority.
The same bill included a 20 percent cut to the "Circuit Breaker" program and another cut to the Homestead Exemption. The so-called "shift to property taxes" claimed by Rep. Berry was not the fault of Republicans. Instead, both political parties know the cuts were in reaction to the worst economic crisis since the Depression.
Ideological differences between parties are a normal part of politics. As long as all sides debate the issues honestly, the process works. Misleading the public to score cheap election-year points damages our democratic system and denies the public the truth.
State Rep. Susan Morissette (R-Winslow) serves on the Insurance and Financial Services Committee and the Criminal Justice and Public Safety Committee. State Sen. Tom Martin (R-Kennebec) chairs the Inland Fisheries and Wildlife Committee and serves on the Labor, Commerce, Research and Economic Development Committee.
Maine House Republicans
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