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M.D. Harmon: New Local Taxes Are Not The Solution, Fiscal Restraint Is

Portland Mayor Michael Brennan: The Tax Man Cometh

Portland Mayor Michael Brennan: The Tax Man Cometh

Tuesday’s paper had some interesting headlines on the front page. To start with, we were told by the left-hand topper that “Blizzards (are) a big part of global warming.”

True, I had joked with my neighbor after this month’s big storm that we now had 26 more inches of global warming to get out of our driveways, but no, these folks were serious, God bless their power-aggrandizing little hearts.

Then, down toward the bottom of the page, we were informed that Obamacare is in a tad of difficulty, because the “Health law’s backers fear higher costs.”

Remember the toddler in the stock trade commercials, when he’s sitting next to the fellow scratching a lottery ticket because the guy tried to do his own investment analysis and that’s all he had left in his retirement fund?

When the ticket turns out to be a dud, the kid leans back in his high chair, opens his eyes and mouth wide, and exclaims, “This is my shocked face!” That’s how I responded to that story.

There’s more to write about Obamacare (as soon as I get done scratching the tickets that comprise my own retirement fund), as indeed there is about “global scaring,” but this isn’t a column about them.

IT WAS ANOTHER headline on the page, at the upper right, that caught my attention for real, as it was a blast from the past: “Local tax: Perennial nonstarter gets a push.”

Oh, dear. What’s a local tax? And don’t we pay them already, on real estate and on cars, boats and other possessions?

Sure, but this would be a new local tax, one that would be levied on sales in your very own home town, piggybacked on everything for which the state now charges sales tax, possibly including meals and lodging.

Why do we need a new tax?

Well, where to begin? You see, the people we elected to do things for us know that if they are to fulfill that high and noble purpose, first they have to do things to us.

To wit, because There Ain’t No Such Thing As A Free Lunch™ , and the state, laboring under fiscal strictures of its own, is trimming the Augusta-to-your-town subsidy called “revenue sharing,” local officials are screaming to high Heaven that this represents a “cost-shifting burden” that will require local taxes to go through the roof.

Pay heed to Portland Mayor Michael Brennan, a perfectly nice fellow when he’s not got his hand on the public purse strings, but a hardcore spender at heart when he does.

As quoted in the story, Brennan said this “tax shift” (a term worth deconstructing in a bit) will be one of the biggest, if not the biggest, in the history of the state.

Therefore, the mayor said, “The choice is very stark and clear whether people want a relatively small decrease in their income tax or relatively significant increase in their property tax.”

The first question that comes to mind is: why would a small decrease in one tax lead to a large increase in another? It’s because the first tax is spread across everyone in the state with a job, and the second applies to a much smaller group of people, the residents of those cities that get more from revenue sharing than they pay in income tax to the state.

And there isn’t any bigger example than Portland, the state’s largest and most prosperous city, which would take a $6.1 million hit if cutbacks in Gov. LePage’s most recent budget are approved in Augusta.

The minor problem is that by law, Maine has to have a balanced budget (there’s no “Maine Mint” to run off greenbacks for us like the one Fed Chairman Ben Bernanke runs in Washington to keep President Obama’s trillions in deficit spending afloat).

So LePage wants to trim a number of state spending accounts (how dare he?), and the end result is that municipalities across the state will end up with $420 million less to spend.

Of course, by cutting income taxes in the last legislative session, Republicans in charge at the time dropped 70,000 Mainers from the tax rolls and made the state far more competitive with its neighbors for business attraction.

But, now, because of the “tax shift” in revenue sharing and other funding, Maine towns and cities will have to boost taxes by $420 million.

My only question is, “Why?”

You see, the term “tax shift” is a loaded one, because it contains the built-in assumption that a revenue cut from the state, cutting back on a system where poorer taxpayers in the country subsidize richer ones in the city, means that the cities have to raise taxes to replace every cent they lost.

And that, dear friends and neighbors, is the difference between people who are fiscally responsible and those who are not.

When you suffer a cutback in your income – perhaps your hours were cut back because your employer can’t afford the costs of Obamacare, or business is slack generally because soaring gas prices that the government has done nothing to alleviate have raised the cost of shipping products – do you go to your neighbor’s house and demand he give you money out of his paycheck?

Not if you want to avoid a black eye, you don’t.

Yet, we seem to have a surfeit of politicians hereabouts who think that is exactly what they are entitled to do to support the levels of spending they were accustomed to when their income stream was higher.

That’s what “tax shift” means, folks. You see, revenue sharing was a tax shift already, and all that’s happing now is that the flow of dollars across municipal borders is being cut back.

Dollars are staying where they were earned. That’s why “local option taxes” are back on the table, as another way to wrinkle some dough out of people’s pockets town by town.

Now, if there are local spending priorities that everyone agrees on, local taxpayers should indeed ante up the money to fund them.

But my fear is that no matter how low local option taxes start, such levies will have no limit once the money starts to roll in, which may be why Maine voters in 2010 soundly defeated a Democratic-sponsored “tax reform” plan that didn’t cut revenue at all, and really was an actual tax shift from the income tax to the sales tax.

Other stories have told how municipal officials and Democratic leaders are getting together soon to figure out ways to boost sales taxes, despite the recent vote turning that down.

Just look at how many years it has taken to get any kind of income tax relief out of Augusta. Do we really want to set that progress aside so easily?

Instead, if local officials find the level of dollars locally is insufficient to support previous levels of spending, they have another option (though, strangely enough, they don’t seem to be mentioning it very much).

Tenderhearted readers (certainly including Mayor Brennan) should avert their eyes from the page right now, because when I say what the other choice is, it could be too shocking for them to bear.

Towns and cities can do what you and I have to do when our outgo exceeds our income. They can – ready for it, here it comes! – cut spending!

One of the first columns I wrote for The Maine Wire was one identifying the Maine taxpayer as “the Invisible Man” of state politics. Taxpayers – men or women – have less representation in Augusta than any of the huge number of lobbying interests that push their demands for funding into the faces of lawmakers every single day.

In the last session, with the GOP in charge, taxpayers’ interests began to get some attention (although nowhere near enough, as state taxes are still too high compared to most other states with which we must compete for business).

Now, it’s only Gov. LePage and a Republican minority standing in the way of the liberals who see taxpayers as sheep to be sheared. Fiscally responsible officials need help, and those many Mainers who bear the burdens of spending have to give it to them right now.

Or their burdens will be increased – with a vengeance.

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