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M.D. Harmon: Make Maine a better place to retire – get rid of the income tax

It’s difficult to understand many things about the ins and outs of politics if you’re not involved in it every day.

People in Augusta and Washington do things that make many ordinary folks — especially taxpayers — scratch their heads and say, “Now, what were they thinking when they did that?”

And few things hereabouts occasion that sort of bewilderment more than this state’s historic tax policies and practices — that is, the ones generally set by Democrats, or at least the “progressives” (read: liberals) among their number.

Especially since the results of those policies are so self-evidently counterproductive at so many levels — including the punishment they impose on people who want to retire here. (I speak as one of those people; my wife and I both pulled the plug on full-time work in the past few months, and we’re seeing many things from a different perspective now.)

Still, it’s also rare that informed criticism of state tax policy gets such rapid verification as did an editorial published on this site last week.

Now, it’s true that as a free-lance writer, I am paid by the powers that be at the Maine Heritage Policy Center to send them a thousand words or so a week giving my thoughtful, considered views on issues of public policy.

And it’s also true that my outlook on those issues is in general agreement with the views held by the people who support and work for the MHPC.

Nevertheless, I’m a grunt, not a general, and I am not generally consulted when the organization takes a position. And I may agree or disagree with any given viewpoints published on this site. (Other than my own, of course. I tend to agree with most of those.)

Nevertheless, there is hardly a position taken by the MHPC’s worthies in recent years that I can more heartily concur with than the recent editorial calling on the state to move in a series of measured steps toward reducing Maine’s income tax to zero.

That even the first indications of such a move would stir business growth and investment is beyond dispute, not to mention the general sense of well-being and optimism it would generate among the hard-pressed working people of the state.

If done gradually, there would be time for economic growth to soften some of the impacts of the cutbacks such a course would impose on those dependent on state services. However, it would also create a new impetus toward differentiating those who truly need such services from those who have grown dependent on outlays without demonstrating such a need.

It also would recognize that we compete with states with lower tax rates than ours, and live right next door to one that has no income or sales taxes at all.

But it’s the impact on prospective and current retirees that’s my point this time, and the release of another survey in late April putting Maine at the bottom of the list — dead last — in the nation as a place to retire is what’s important now.

It’s bad enough that the website MoneyRates.com (slogan: “Make the most of your money”) dropped Maine from 28th in the nation last year to 50th this year based on a survey that weighted states by tax policies, climate, life expectancy and crime.

That site isn’t the only critical observer; Kiplinger’s rates Maine in its bottom 10 retirement states, too.

But it’s much worse that the new survey was featured prominently by AARP, the nation’s largest private organization serving retirees. That got the news prominent coverage, and told potential residents all over the country to look elsewhere.

True, Maine was average on life expectancy and right at the top on low crime rates, but those categories were weighted far less than taxes and climate, and Maine suffered greatly in both areas.

There’s not much to be done about climate (except hope global warming gets its act in gear), but taxes are entirely up to our discretion — and discretion hasn’t exactly been a hallmark of Maine’s political class in recent decades, when Democrats controlled the levers of policy.

We’ve been paying the price for that. As the editorial noted, “Maine lost people and their incomes to the nine states that have no income tax almost every year from 1995 to 2009. This works out to nearly 12,000 people and over $661 million in income lost. Conservative estimates show this out-migration cost state and local government over $87 million in revenue over this time period.”

And that doesn’t even begin to count the number of people who might have moved here (lots of people — like my wife and I — aren’t frightened by some snow and lower temperatures, especially if they are found in a place with great natural beauty) if AARP, Kiplinger’s and others wouldn’t have scared them away.

Maine, like many other states, doesn’t tax Social Security income, but offers only a measly $6,000 personal exemption on retirement income, where others don’t tax it at all.

So Maine has a window of opportunity to make a real impact not only within our borders, but also far beyond them.

Consider what might happen if, in 2014 or 2015, organizations like AARP and others were saying, “Maine has moved from the bottom 10 states for retiree-friendliness to the top 10.”

That would be something to brag about. It would also be something to profit from. All we have to do is, well, do it. And the time to start is now.

M.D. Harmon, a retired journalist and military officer, loves the state of Maine — especially since it’s no longer governed by socialists. He can be contacted at: mdharmoncol@yahoo.com