Onerous income tax increase bill defeated in Taxation committee

On Tuesday, the Joint Standing Committee on Taxation held a work session on several bills. The committee voted unanimously 11-0 ought-not-to-pass on LD 1647, An Act to Provide Tax Fairness to Maine’s Middle Class and Working Families, which was sponsored by Rep. Seth Berry (D-Bowdoinham).

The Maine State Chamber testified in opposition to the bill last session on the basis that it was nothing more than an income tax increase on Maine’s high earners. The bill proposed a payment of a tax equalization assessment levied on Maine’s high earners ($250,000 for single, $325,000 for head of household, and $400,000 for married filing jointly) and would have redistributed revenue realized to increase Maine’s homestead exemption and earned income tax credit.
       
The tax equalization assessment would have been calculated by  taking the difference in the average effective tax rate on state and local taxes paid, calculated by decile, and tax a family’s individual effective tax rate on state and local taxes paid, the sum of which is multiplied by a tax family’s expanded income. How this would ever possibly be calculated by Maine Revenue Services is unknown.
       
The bottom line is that it would have penalized folks who are working hard to get ahead – driving hardworking people and job creators out of our state and discouraging businesses from locating in Maine – and would have made Maine one of the least attractive states to live and work in the country.
       
uring the past several years, first in 2011 and then again in 2015, the Legislature has lowered the top income tax rate in an effort to attract and retain businesses and employees. Linda Caprara testified on behalf of the Maine State Chamber that this was a step in the right direction, and the bill would have dismantled those efforts.  She said an unstable and unreliable tax climate harms Maine’s reputation nationally and is problematic for obvious reasons, especially at a time when Maine is making great strides to attract and retain employers and workers.  She added the new tax would devastate our economy and drive away professionals and employers at a time when Maine is making significant efforts to retain and attract them.
               
​If you have any questions, please contact Linda Caprara by calling (207) 623-4568, ext. 106, or by emailing [email protected].