Commentary

The Fallout of Question 2: Increased Taxes for All

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Those who read the first half of my take on the aftermath of Question 2 know that Maine will need to find a new way to make up for the revenues lost as a result of high-income earners fleeing our state for better tax climates.

The out-migration of high-income households is going to happen. As I said in part one, if I can find three people who tell me they’re leaving without even looking, I am sure there are going to be dozens, if not hundreds, pushed out of Maine by this referendum.

I don’t want to throw any of this out as a sky-is-falling prediction without adding a few thoughts to what I actually think will happen, so here is my take:

In the first year of a new state budget with the surtax, the structural gap could be covered with one-time transfers and gimmicks, but in the second year, those options disappear. There would be no following year to dump off problems.

Lawmakers would then be stuck trying to cut spending to make up for a significant revenue shortfall, as they won’t have time to make adjustments to income or sales tax rates.

In the following biennial budget, after the 2018 election, I predict we would see lawmakers back at their old game of knowingly creating an unbalanced budget, passing the buck through tactics similar to what they did to create the pension shortfall and the hospital debt, and looking to increase the income tax on people with lower incomes.

Ultimately, by having a top income tax rate over 10 percent, liberals will find it much easier to tell households earning $100,000, then $75,000, then $50,000, that it is time to “pay their fair share” and “this is for the children” as they move increasingly lower income households into higher tax rates.

Before we know it, struggling young families working entry-level jobs will be paying their “fair share” at rates as if they were 1-percenters in many other states with progressive income taxes.

Never forget, when Gov. Paul LePage took over the Blaine House, our top individual income tax rate was 8.5 percent on individuals earning about $20,000 per year, or households earning $40,000 per year.

Just a few years ago, Democrats were okay with taxing people as if they were “rich” when their earnings were low enough that they qualified for the Earned Income Tax Credit or were living on the edge of poverty, and they will try to do it again if this surtax is allowed to go through and their grand ideological plan is allowed to hurt Maine.

The effects of trickle-down socialism will be the equality of shared financial misery and economic pain within 5 years if this surtax is allowed to stand.

About Jason Savage

Jason Savage has been the Executive Director of the Maine GOP since 2013. Before heading up Maine's premier political party, he co-founded and served as Executive Director of the non-profit organization Maine People Before Politics, where he advocated for lower taxes, less debt, welfare reform and other priorities for Maine people. Jason's work has been published in every major newspaper in Maine.

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