Maine Democratic Party Slams Republican Proposal to Eliminate State Income Tax

Strategic Insights -

The Maine Democratic Party, led by Chairman Phil Bartlett, is criticizing a proposal by Governor Paul LePage and Maine Republican lawmakers to eliminate the state income tax, which would result in a loss of $1.7 billion in annual revenue. This extreme measure would disproportionately benefit the wealthy, with the top 1% of Mainers, comprising 7,000 households with incomes over $392,000, receiving an average income tax cut of $61,000. Middle-income Mainers, 140,000 households with incomes between $38,000 and $60,000, would receive an average income tax cut of $900, which would be quickly erased by property and sales tax increases. Experts and economists, as well as everyday Mainers, disagree with the Republican proposal, citing the negative consequences for public education, infrastructure, and public safety.

Key Takeaways:

  • The proposed elimination of the state income tax would result in a loss of $1.7 billion in annual revenue, with the burden falling on middle-to-low income taxpayers through higher property taxes or massive cuts to public education, infrastructure, and public safety.
  • The top 1% of Mainers, comprising 7,000 households, would receive an average income tax cut of $61,000, accounting for 26% of the total amount.
  • Middle-income Mainers, 140,000 households, would receive an average income tax cut of $900, accounting for less than 8% of the total.
  • Eliminating the income tax would lead to higher property taxes (8-12% above the national average) and sales taxes (18-21% above the national average) in states without an income tax, according to the Center for Budget and Policy Priorities.
  • A Mainer and former business owner opined that the income tax is the most fair and efficient tax system, while a returning Mainer advised the GOP to focus on pressing issues facing young professionals and families.
  • Maine Democrats propose a comprehensive tax relief plan, the Better Deal for Maine, which prioritizes tax cuts for the middle class, lowers property taxes for all Maine homeowners, and invests in education, workers, and communities.

Statistics:

  • $1.7 billion: Annual revenue loss if the state income tax is eliminated.
  • 7,000 households: Number of households in the top 1% with incomes over $392,000, which would receive an average income tax cut of $61,000.
  • $61,000: Average income tax cut for the top 1% of Mainers.
  • 26%: Percentage of total income tax cut that the top 1% would receive.
  • 140,000 households: Number of middle-income households with incomes between $38,000 and $60,000, which would receive an average income tax cut of $900.
  • $900: Average income tax cut for middle-income Mainers.
  • Less than 8%: Percentage of total income tax cut that middle-income Mainers would receive.
  • 8-12%: Property tax increase above the national average in states without an income tax.
  • 18-21%: Sales tax increase above the national average in states without an income tax.

Sources:

  • Maine Democratic Party news release
  • MECEP analysis
  • Center for Budget and Policy Priorities (CBPP)
  • A Mainer and former business owner's op-ed piece
  • A Mainer who returned home to start a new business
  • Maine Democrats' Better Deal for Maine plan
  • Institute on Taxation and Economic Policy (ITEP) analysis
  • Maine Center on Economic Policy