Inside Augusta

Let’s Fix Questions 2 and 4 for Working, Taxpaying Mainers

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It’s a busy and important day for conservatives in Augusta, where the Labor, Commerce, Research and Economic Development (LCRED) Committee and Taxation Committee will be holding work sessions on a number of bills that would roll back provisions in Questions 2 and 4 passed by Maine voters last November.

The Taxation Committee will be holding work sessions on LD 337 and 571, which both aim to eliminate the 3 percent surtax on incomes earned over $200,000 to fund k-12 public education in Maine. As a result of Question 2, Maine now has the second highest tax rate in the country, and mom and pop shop owners pay a higher rate than corporations. This is because many small business owners in Maine file their taxes as S-corporations, or pass-through entities, meaning business profits are passed onto the business owner as individual income.

Because of Question 2, corporations like Hannaford and Walmart now pay a lower tax rate in Maine than small businesses, which make up roughly 95 percent of all Maine employers. It’s estimated Question 2 will result in the loss of roughly 4,000 private sector jobs in Maine. These changes must be reversed to support small business owners and protect the jobs of thousands of Maine workers.

LCRED will be reviewing LD 673 and 702, which both aim to reinstate Maine’s tip credit. The tip credit was eliminated in Maine through the passage of Question 4, which increases Maine’s minimum wage to $12 an hour by 2020 and indexes future increases to inflation. Also included in the measure was a provision to eliminate the tip credit in Maine by gradually increasing tipped worker wages by $1 annually until reaching $12 an hour by 2024.

Question 4 causes serious troubles for those employed by Maine’s food service industry. Tipped workers expect wages to decline due to lack of tips, and restaurant owners anticipate food cost increases to make up for spikes in labor costs. The current system in place leaves little room for family-owned restaurants to turn a profit and gives noticeable advantage for chain restaurants, like Darden Restaurants, to succeed in Maine.

LCRED will also hold a work sessions on LD 774, 775 and 778. LD 774 aims to enact a training wage for low-skilled workers, namely high school students, below the minimum wage. This bill is intended to provide low-skilled workers the opportunity to compete in the job market because of our state’s newly enhanced minimum wage. LD 775 would prohibit Maine’s minimum wage from exceeding the average minimum wage in New England, and LD 778 would eliminate indexing the minimum wage to inflation.

As a result of Question 4’s passage, Maine will have the highest minimum wage in New England by 2020. The measure is expected to eliminate more than 14,000 jobs from Maine’s economy and close several family-owned restaurants throughout the state.

Legislators must act on Questions 2 and 4 to save any hope of prosperity for working, taxpaying Mainers.

About Jacob Posik

Jacob Posik, of Turner, is a policy analyst for the Maine Heritage Policy Center. He can be reached at jposik@mainepolicy.org.

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