Maine Capital Investment Credit encourages capital investment, especially helping small- and medium-sized businesses
EDITOR’S NOTE: The following testimony was delivered by Linda Caprara on behalf of the Maine State Chamber of Commerce in opposition to the report on Maine’s Capital Investment Credit (MCIC) by the Office of Program Evaluation and Government Accountability (OPEGA), at a public hearing held on Thursday, February 27, 2020, before the Government Oversight Committee. We have reprinted it here for your review.
Good morning, Sen. Chenette, Rep. Mastraccio and members of the Government Oversight Committee (GOC). My name is Linda Caprara. I am a resident of Winthrop, and I represent the Maine State Chamber of Commerce. I am here to testify in opposition to the report on Maine’s Capital Investment Credit (MCIC) by the Office of Program Evaluation and Government Accountability (OPEGA).
We feel that the findings in this report are flawed, and that the Maine Capital Investment Credit does what it was designed to do – that is to encourage capital investment, especially helping small- and medium-sized businesses.
In 2011, the Legislature enacted Maine’s version of the Federal Bonus Depreciation Deduction to stimulate the Maine economy. The purpose of the credit was the same as it was at the federal level, that was to encourage companies to invest sooner by allowing them to take accelerated depreciation on equipment purchased in Maine. This was done to stimulate the economy by encouraging more investment. The Legislature also decided to offer Maine’s version as a credit instead of adopting the Federal Bonus Depreciation Deduction in full because of the potential cost. If Maine adopted the federal bonus depreciation deductions as is, Maine companies would have been allowed to take accelerated depreciation on investments made in other parts of the country. The Maine Investment Credit is limited to Maine investment only.
If Maine chooses not to continue this credit, Maine will be an outlier as (according to OPEGA) most states do adopt a version. This will undoubtedly place Maine companies at a competitive disadvantage with companies that operate in states that offer that accelerated depreciation and the competitive advantage it provides.
At the presentation of the report to the GOC last week, OPEGA staff indicated that, when compiling the MCIC report, no Maine companies, including ones that took the MCIC credit, were interviewed for the report. In fact, OPEGA indicated that their findings were based on reviews of “robust” literature at the Federal level only. OPEGA simply indicated to the GOC that the same findings outlined in these pieces of literature could be applied to Maine’s credit. We find it hard to understand how one could deduce that the credit does not help Maine businesses if Maine businesses were never asked.
Again, we feel that this report is flawed. I would be happy to answer any questions. Thank you.