Chamber testifies in opposition to three more bills seeking to increase income taxes

On Tuesday, March 16, the Maine State Chamber of Commerce testified before the Joint Standing Committee on Taxation in opposition to three bills that would increase income taxes in the state. Linda Caprara testified on behalf of the Maine State Chamber in strong opposition to LD 495, An Act to Improve Tax Progressivity by Establishing New Top Individual Income Tax Rates; LD 532, An Act to Lower income Taxes for Middle Income Families in Maine; and, LD 570, An Act to Provide for Fairness in the Taxation of Extraordinary and Unearned Income by Establishing a 3 Percent Surcharge on Net Capital Gains and Dividend Income over $250,000 for Taxpayers Filing Single or Married Filing Separate Returns and Over $500,000 for Taxpayers Filing Joint Returns.

These bills are not unlike two other bills the Maine State Chamber testified in opposition to last week that would propose to increase income taxes.  The Maine State Chamber’s testimony reinforced several key points made last week, including: 

• The Legislature has made significant strides over the years to reduce personal income taxes for Maine people. These bills represent a step backwards!
• Maine companies, like those nationwide, have struggled greatly during the pandemic and will likely continue to do so until this pandemic is over.
  
• If these bills are enacted, Maine small businesses will end up paying more. As approximately 80% of businesses are established as LLCs, partnerships, or S-Corps, where the income from the business flows through to the individual taxpayer.  Maine small business owners will pay these increased taxes.
• An analysis conducted in 2017 by the Office of Policy and Management concluded that a 3% surtax on incomes over $200,000 would have a negative impact on Maine’s economy, including reductions in employment, population, labor force, income levels, and economic output. The analysis showed that just three years after implementation the increased income tax rates would have resulted in a reduction to private employment of between 1,900 and 6,600 workers, a negative impact to real, disposable income by $270 million to $800 million, negative population impact of up to 3,800, and a negative economic impact of up to $320 million. These are real numbers that will devastate our economy and keep it from getting back on track after the pandemic.
• The 3% surcharge in LD 570 will impact small business owners who try to sell their businesses. To avoid paying a whopping 3% surcharge on that gain above certain income thresholds, they can simply change residence before the sale, and Maine could lose the income tax from the sale as well as any estate tax, if those folks had planned to retire in Maine. 
  
• These bills represent public policy that is opposite to the stated goals of the State’s 10-year Strategic Plan, that is to grow Maine’s economy by increasing jobs, wages, and value of product. 
• High-income tax rates impact businesses’ ability to recruit professionals to the state. Higher income earners are more mobile and can locate anywhere.
• Ultimately, these bills punish success and those who work hard to achieve it. 

 
The Taxation committee will hold a work session on Tuesday, March 23 at 9:00 a.m. If you have any questions, please contact Linda Caprara by calling (207) 623-4568, ext. 106, or by emailing lcaprara@mainechamber.org.