South Portland resident Albert DiMillo has written
several columns and made several presentations opposed to tax reform.
This information has been used at length in the public debate over
tax reform, and much of his analysis is misleading or wrong. Provided
below is:
1) A
published
column by
Rep. Thom
Watson,
House
Chair
of the
Taxation
Committee, pointing out flaws in DiMillio’s analysis;
2)
A point-by point response to DiMillo’s presentation materials.
Tax reform helps Mainers of all income levels
The new tax system is also more progressive than the current system.
THOMAS
WATSON
BATH — Opponents of the recently enacted Tax Reform bill
(LD 1495) are doing everything they can to confuse the public.
A recent salvo was a column in this newspaper by South Portland
resident Albert DiMillo, in which he claims that the bill "significantly
reduces the progressiveness of the income tax law." This is
simply untrue.
By any accepted measure, the new tax system will be more progressive,
meaning that lower- and middle-income persons will pay a smaller
proportion of the overall tax burden than they do now. Even after
any new sales taxes are included, the overall tax system is still
more progressive than now.
And LD 1495 reduces the overall tax burden on Mainers by more
$57 million, and every income group wins.
Those of us who have labored on this issue for years believe that
LD 1495 is just about as fair a system as is possible.
The overall tax burden of the bottom half of taxpayers will fall
by almost 19 percent, and will decrease by 3 percent for the top
10 percent of taxpayers.
High-income people do receive, on average, the greatest dollar
benefits; but only because their overall tax contribution to the
state is much higher. Proportionally, folks on the lower end get
a bigger break.
Mr. DiMillo's assertion that "3.2 percent of the taxpayers
will receive a net tax savings of $37.5 million" is just wrong.
The truth is that the top 10 percent of taxpayers will see a net
tax savings of $17.7 million.
This is a large number, but a fair one, well below the percentage
this group pays in taxes.
In fact, although this group's tax burden will drop by 3 percent,
when all is said in done, they will be paying a larger portion
of the diminished tax burden, at 51.4 percent rather than 50.8
percent. That's one reason why the new tax code is more progressive.
It is easy to be confused by Mr. DiMillo's numbers because sometimes
he is talking about just income taxes and at other times about
overall tax burden (that includes both income and sales taxes).
It is further confusing because he sometimes uses figures from
the enacted law and at other times pulls from an earlier version.
Conversely, the legislators who have championed tax reform have
always tried to present the numbers fairly. We've never hidden
the fact that the new plan will increase income taxes on a small
percentage of Mainers (about 4.5 percent), or that after new sales
are included, the overall tax burden will go up on a slightly larger
number of Mainers.
Indeed, we've been pleased that we can achieve a meaningful change
in the code and still bring direct tax relief to nearly 90 percent
of all Mainers.
Remember, the reduction in taxes is an added benefit to the purpose
of tax reform; such efforts are undertaken not just to provide
tax relief, but to achieve broader goals, including fairness and
stability.
Our opponents continue to question how much tax relief will be
provided and who will get it. Their approach is divisive and their
numbers are often wrong. But more important, they are missing the
point.
Tax reform was intended to have multiple goals. Just as important
as lowering tax burden is that LD 1495 defines Maine as a state
with lower tax rates – and that is attractive to businesses
ready for investment.
Equally important is that LD 1495 will result in more stable state
revenues, moderating both the peaks and valleys that have created
such "structural gap" problems over the years.
If the Republicans are successful in their attempt to bring about
a people's veto, Mainers will not only lose out on income tax breaks,
but also will lose the new ability to apply for "Circuit Breaker" property
tax refunds when they file tax returns.
Another feature of LD 1495 is the repeal of the current meals
tax applied to some assisted living and retirement homes. That
onerous tax will continue if the Republicans are successful.
The vast majority of Mainers will benefit from LD 1495 directly
because it will lower their taxes. But all Mainers will benefit
from a smarter tax code that positions Maine better for the future.
I truly hope people think about the consequences of their signing
veto petitions.
Click here to view a point-by-point response to Albert DiMillo