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House Republican Leader Ken Fredette (left) and Assistant Leader Alex Willette (right).
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For Immediate Release

Date: 12/04/13

Democrats Double Tax Hike Quota After Flatly Rejecting Spending Cuts

Mainers say budget problems caused by spending, not inadequate taxes

AUGUSTA - House Republican leaders on Tuesday called attention to the failure of Democrats to balance Maine's budget. The biennial budget established two task forces—one to find $33.7 million in spending cuts and another to find $40 million in additional tax revenues by way of eliminating tax credits.

The group responsible for finding spending reductions was the Office of Policy and Management (OPM), and Democratic appropriators in early October flatly rejected the spending cuts that they themselves asked OPM to find. Recent surveys of moderate House districts have found that Mainers overwhelmingly peg overspending, not tax rates, as the culprit for Maine's recurring budget shortfalls.

Yesterday, the Tax Expenditure Review Task Force, which was tasked with finding $40 million in tax credits to eliminate, reported out a slew of vague tax hike ideas that actually add up to over twice the amount they were asked to find.

According to the nonpartisan Office of Fiscal and Program Review (OFPR), which staffed the task force, most of the roughly $81.6 million in tax hikes they proposed come from new taxes on amusements such as movie theater tickets ($22.6 million), services such as haircuts and gym memberships ($22 million), and even a new tax on cable and satellite television ($4.4 million). Also included were a cap on the Opportunity Maine tax credit for college graduates, a new tax on vending machines, $5.8 million in new taxes on companies' research and development efforts, and more.

TAX TASK FORCE PROPOSALS

Amusement taxes: $22.6 million

Personal care services: $22 million

Cable/Satellite TV services: $4.4 million

Pine Tree Zone income tax hike: $3.3 million

Tax research and development efforts: $5.8 million

Raid tax relief fund: $4 million

Completely unverified LIFO credit: $10 million

Tax on students: $1.7 million

Tax on vending machines: $400,000

Other: $7.4 million

TOTAL proposed tax credits eliminated: $81.6 million

"It should come as no surprise that Democrats have completely rejected state spending reductions in any way, shape, or form while having a field day with tax hikes," said House Republican Leader Ken Fredette of Newport. "The tax committee was supposed to find $40 million in very specific tax credits to eliminate, but instead, they found so many ideas they liked for raising the tax burden on Maine people that they didn't know which ones to choose."

"Democrats have completely abdicated their constitutional responsibility to balance the budget," added Rep. Fredette. "They refused to reduce state spending and now they have made a sham out of the tax task force, throwing together vague ideas to attack middle class taxpayers once again. Enough is enough. We must make state government sustainable and get our spending under control."

"Young people can't afford the taxes that Democrats keep piling on us," said Assistant House Republican Leader Alex Willette of Mapleton. "Liberal politicians are proposing to tax us every time we go to the movies or buy a bag of chips from a vending machine while cutting a tax credit that is instrumental in helping us pay off our student loans. They must get serious about getting state spending under control."

BACKGROUND

State spending has increased by about 80 percent in the past 20 years.

Welfare spending has nearly doubled in the same time, even as Maine's poverty rate has stayed the same and below the national average.

Maine ranks number one in the nation for spending per pupil on school administrative costs, or 2.75 times the national average.

According to the Tax Foundation, Maine ranks among the top 10 highest-taxed states in the country.

A Small Business & Entrepreneurship Council study ranked Maine 5th worst in the nation for business tax climate; a ranking which factored-in many personal taxes as well.

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Contact:
David Sorensen
Maine House Republicans
Tel: (207) 205-7793