Office of Tax Policy Releases Distributional Analysis of Governor’s Tax Cut Plan
March 16, 2015
For Immediate Release: Monday, March 16, 2015
Contact: Adrienne Bennett, Press Secretary (207) 287-2531
AUGUSTA – As Governor Paul R. LePage travels around the state to explain details of his tax reform and relief plan, on Monday, the Office of Tax Policy (OTP), an independent office within Maine Revenue Services, released a report highlighting the fairness and equity of the plan.
The report estimates Maine families will realize a net tax reduction of $238 million in 2016 as a result of the changes proposed by the Governor. By 2019, when the tax cuts are fully phased in, the report estimates Maine families will experience a net tax burden reduction of $292 million. This $292 million does not include the elimination of the estate tax, which is included in the Governor’s tax plan and in 2013 cost Mainers nearly $80 million.
“Mainers win under my plan, and this report shows just that,” said Governor Paul R. LePage. “In the first year alone, $238 million will be kept by hardworking Maine people, allowing them to save, invest and put more into the Maine economy. My proposal seeks to remove the barriers to Maine’s future economic growth.”
According to the report, the vast majority of tax families in Maine will experience a net tax burden reduction. Of these families, the bottom 20 percent of Maine households experience the greatest reduction in tax burden.
In total, 60,000 low-income Maine families will no longer pay any state income tax. To offset the impact of increases in sales and property taxes on low- and middle-income families, the Property Tax Fairness Credit (PTFC) is strengthened and the new Sales Tax Fairness Credit (STFC) is introduced. Both sales and property taxes are generally considered by economists to be regressive.
“The distributional analysis report indicates that the Governor’s plan is weighted similarly to our current tax system,” said Dr. Michael Allen, associate commissioner for Tax Policy. “This shows continued equity in the tax code and is accomplished while reducing some of the highest income tax rates in the country."
The Office of Tax Policy Research is headed by the Associate Commissioner for Tax Policy and consists of a staff of lawyers, economists, and policy assistants. The Office is responsible for developing, analyzing, and researching the legal and economic impact of tax policy issues and estimating the impact of these policies on state revenues.