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Rep. Jeff Gifford (R-Lincoln)
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For Immediate Release

Date: 10/11/12

Rep. Gifford Op-Ed: Maine would benefit by ending income tax

To the Lincoln County News

By Rep. Jeff Gifford

When I went to work in 1964 at Eastern Fine Paper, every dime I earned was left alone by the state. The mill looked like it would operate forever, and those of us working there knew that with hard work, we would have our jobs as long as we wanted. Back then we did not have a state income tax. We paid taxes to the state in the form of sales tax and property tax, but the state had the common sense to leave the money we worked for in our hands, to spend as we saw fit.

All of this changed in 1969 when Governor Curtis decided, along with allies in the Legislature, that the state should take a cut of the money we earned. They argued that the state needed more money and more spending, and thus the Maine income tax was born. Ironically, former Governor Curtis no longer lives in Maine. He currently resides in Florida, where there is no state income tax.

As with most things the government does, the income tax started off small and seemed relatively harmless. Mainers, being charitable folks, felt that if by giving a little more they could help others, then perhaps they should pay a little more. Of course, government isn't a charity and it quickly began taking a little more out of paychecks, and then a little bit more. Gradually, they took more and more. After all, the government had this pet project or that pet project to spend money on.

Soon mills started to close. This meant fewer people earning incomes, so the state needed to increase the income taxes to make up for the people out of work. These increases meant it was harder for new businesses to open and for existing businesses to stay open. That translated to more layoffs and more mills closing, with nothing to take their place. Suddenly those of us working at the mills didn't feel so secure in our jobs. Our paychecks were getting smaller as the state taxed us more for our hard work.

You can see where this cycle took us - just look around. We have one of the heaviest tax burdens in the country and most of our industry has gone elsewhere. Sure, there are other factors at work, there always are, but many of those are out of our control. However, we can do something about the state income tax.

In the 125th Legislature, we started to address this issue by passing the largest tax cut in Maine history. Did you know if you were earning about $20,000 a year, the State of Maine considered you rich and taxed you at the top rate? We lowered the top rate from 8.5 percent to 7.95 percent. We also made sure that you weren't paying the top rate on just $20,000 a year. In fact, we instituted a zero percent bracket that exempts some 70,000 low-income residents from any income tax liability.

These tax changes are only a start; we need to move towards eliminating the income tax. This will require us to spend less in Augusta and prioritize how we spend money. Nine states in the union manage to survive without an income tax, including New Hampshire.

Money that comes into the state from the income tax totals around $1.3 billion a year. That means to eliminate the tax we would have to cut the state budget by around 37 percent, which is not an insignificant amount. If we have the will to do it, we would create economic growth the likes of which Mainers haven't seen in some time. This growth would help offset the cuts as revenue from the sales tax. Other money streams would increase due to the economic expansion.

Of course, it is also about more than just spending. It is about a view of government. Sales taxes are paid only when we choose to spend money. Income taxes take away the money we go to work every day to earn. The government didn't work for that money - you did - and and the notion that the state gets its hands on your money before you ever see it is simply unfair.

Eliminating the state income tax will be difficult and will require tough decisions. Nevertheless, I believe the benefit to future generations of Mainers, who would rather stay here to work than move away, would be great. This isn't something that can be done overnight, but it should at least be something we are talking about.

Prosperity is my goal in the next Legislature, and eliminating the income tax could be an important step in putting us on the path to a stronger economy. ###

State Rep. Jeff Gifford (R-Lincoln) serves on the Agriculture, Conservation and Forestry Committee

Jay Finegan
Maine House Republicans
Tel: (207) 287-1445