Republican radio address: Truth About Taxes

For the weekend of May 8-9, 2010

Greetings, this is Andre Cushing, state representative from Hampden.

By now you probably know that Election Day, June 8th, will give voters a chance to repeal a controversial new tax law. Ballot Question 1 reads like this: “Do you want to reject the new law that lowers Maine’s income tax and replaces that revenue by making changes to the sales tax?”

Well, heck no. It sounds pretty good. But there’s a lot more to the story.

The income tax provisions are extremely complicated. Suffice it to say that the average household will see a tax cut of only about $27. However, 82,000 taxpayers will see their taxes increase by $500 to $1,000 a year. You no longer will be able to deduct such popular write-offs as mortgage interest, property taxes, charitable contributions and medical expenses. Those are replaced by a credit, but the credit phases out early and then disappears. The law also eliminates the lower progressive tax rates of 2 percent and 4.5 percent. Everyone will be moved into the 6.5 percent bracket. The real winners are people making more than $317,000 per year, whose taxes will drop by about $6,000. The losers are those below that lofty income level. Adding insult to injury, the law suspends the inflation indexing of the tax tables until 2014. That means your $27 tax cut will turn into a $45 tax increase a few years later.

This law was passed last year by the Democratic majority. In the House, not even one Republican voted for it, because we understood it was really a tax increase in disguise. While the law provides a windfall for the wealthy, it also raises the sales tax on more than 100 services and activities that have never been taxed before. In his State of the State address last winter, the governor said the new law “closes loopholes in the sales tax.” Closing loopholes sounds harmless, but voters need to know a lot more to make an informed decision. As a public service, let me mention some of the things that would be taxed.

The big one is labor on car repairs, but there’s a lot more. Dry cleaning…car washing…long distance phone calls… limousine services…and repairs of all kinds of things – jewelry, cameras, musical instruments, electronic equipment, guns, furniture, lawn and garden equipment, computers and office equipment. Beyond that we would tax tailoring, shoe repair and tickets to almost everything – movies, theaters, lectures, concerts, festivals, amusement parks, planetariums, water parks, fairgrounds, race tracks, carnivals and circuses, sporting events, museums, petting zoos, animal parks, convention centers, historical sites, miniature golf, go-cart tracks, paintball, auto shows, boat shows, camping shows, home shows, flower shows and antique shows.

There’s plenty more in the transportation sector, with taxes on whitewater rafting, wagon rides, sightseeing tours by bus, boat or airplane, and rides on helicopters and hot air balloons. The entertainment sector also is hard hit, with new sales taxes on hired bands and DJs for events, comedians, hired clowns for kids’ parties, jugglers, ventriloquists and bar cover charges – but only if a band is playing.

The list of things subject to the new tax continues – diaper services…pressure washing…furniture cleaning…picture framing…house cleaning…rug cleaning…interior decoration…meal preparation…service contracts…butchering…art restoration…golf driving ranges…rental of storage units and safe deposit boxes…moving services…tuxedo and gown rental…vehicle towing…boat mooring and adult entertainment. Yes, a sales tax on exotic dancers. Pet owners also take a hit, with taxes on pet exercising, pet sitting, pet training, pet grooming and pet boarding at kennels.

The sales tax on meals and lodging jumps from 7 percent to 8.5 percent. The Democrats claim the meals and lodging tax exports taxes to tourists. But Maine Revenue Services says 71 percent of all meals taxes are paid by Maine residents. The tax on candy goes to 10 percent.

To the governor, all this might sound like closing some sales tax loopholes. But to the people paying all this money – you and me – it works out to a tax hike of $80 million per year.

This is Andre Cushing. Thank you for listening.

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