Question 2: A Tax Hike Maine Cannot Afford
March 20, 2017
For Immediate Release: Monday, March 20, 2017
Contact: Adrienne Bennett, Press Secretary, 207-287-2531
AUGUSTA – Today, the Governor’s Office of Policy and Management (OPM) formally submitted their economic impact analysis of Maine’s new 10.15 percent tax rate to the members of the Maine Legislature’s Joint Standing Committee on Appropriations and Financial Affairs and Joint Standing Committee on Taxation.
The report, which was delivered as the Tax Committee prepares to hold public hearings on several bills related to the Question 2 surtax, comes after OPM released the report’s executive summary earlier this month.
“The results of my office’s analysis indicate that the new surtax will have a decidedly negative impact on Maine’s economy,” said OPM Director Jonathan LaBonte. “Regrettably, we will witness these effects through reductions in employment, population, gross domestic product, and income at a time when Maine has seen improvement in all of these areas.”
OPM staff estimate that in the first year of the new policy:
• Maine’s population will be negatively impacted by 800-1,400
• Private sector employment will be negatively impacted by 2,400-4,300
• GDP will be negatively impacted by $40-$160 million
• Real disposable incomes will be negatively impacted by $400-$600 million
“Maine’s economy had its best year since the Great Recession in 2016,” continued Director LaBonte. “If there is one message that policymakers should take away from our economic impact analysis, it is that Maine cannot afford Question 2’s tax hike.”
Last November, Question 2 passed narrowly at referendum and imposed a new 3 percent surtax on Maine’s top rate, effective January 1, 2017. At 10.15 percent, the new rate, a marginal tax hike of 42 percent, applies to individuals, families, and businesses with taxable income in excess of $200,000 a year. The new 10.15 top rate is the second highest in the country and the highest at this level of income.