On Tuesday, February 11, the Joint Standing Committee on Taxation will hold a work session on a carryover bill – LD 903, An Act to Improve Corporate Tax Fairness by Amending the Rates Imposed on Corporate Income. The Maine State Chamber testified in opposition to the bill at last session’s public hearing. Sponsored by Rep. Scott Cuddy (D-Winterport), the bill would establish two new tax brackets and three new rates for corporate income taxes. Corporate income between $2 million and $3 million would be taxed at 8.5%, and income between $3 million and $3.5 million would be taxed at 8.75%. Currently any corporate income below $3.5 million is taxed at 8.33%. In addition, the bill proposes to raise the top rate to 9% from 8.93%.
According to the Tax Foundation, Maine would be one of only seven states in the nation to have corporate income tax rates 9% or above. Maine’s current top corporate income tax is already higher than the top rate in our neighboring New England states of Connecticut, New Hampshire, Vermont, Rhode Island, and Massachusetts.
During the past several years, the Maine Legislature took several steps to decrease the overall top income tax rates for individuals. Even though the top corporate income tax rate did not decrease, there were several attempts to do that as well. The increases will very likely hit small businesses, as well as C-corps, which are often how small businesses operate.
The corporate income tax would no doubt make Maine less attractive and less competitive and would also impact future investments. Paying higher taxes can impact the amount a business owner chooses to reinvest in their businesses in terms of capital and personnel. Failure to reinvest can have a direct impact on growing the economy and job creation.
If you have any questions, please contact Linda Caprara by calling (207) 623-4568, ext. 106, or by emailing email@example.com.