By J. Scott Moody, CEO
The Maine Heritage Policy Center
The Lewiston Sun Journal ran an inaccurate editorial on Sunday, July 15, “A taxing comparison to Maine,” that claimed Maine is not a high tax state compared to New Hampshire.
“The bottom line, though?” the editorial asked. “We Mainers paid fewer state taxes than our bordering neighbors during the first part of this year. And, interestingly enough, based on U.S. Census figures (which do not include local and federal taxes), we paid fewer state taxes during the same time . . . this rally cry that we’re the most taxed state in the country deserves more scrutiny than any sound bite can carry.”
Really? All the ink spilled over the last few decades about Maine’s high tax burden has been in vain? Rejoice, the Sun Journal declares it all a hoax!
The most useful way to gauge the tax burden is by comparing it with the productive capacity of the economy. The Sun Journal simply—and erroneously—looked at the absolute amount of taxes being paid in Maine and New Hampshire.
The editorial failed to consider that New Hampshire’s economy is sizably larger than Maine’s. For instance, in 2011 personal income in New Hampshire was 20 percent higher—that’s $10 billion more than in Maine ($60 billion in N.H. versus $50 billion in Maine).
The gap grows even wider if you consider just the private sector share of personal income. In 2011, New Hampshire’s private sector was 39 percent larger ($13 billion) than Maine’s ($46 billion versus $33 billion). Overall, New Hampshire has the largest private sector in the country, while Maine has only the 39th.
When looking at the total, it is no surprise that New Hamsphire would show higher tax collections than Maine. The difference is that those living in New Hampshire’s economy have a greater ability to pay than those of us in Maine’s economy.
As such, New Hampshire’s tax burden is one of the lowest in the country, while Maine’s remains one of the highest.
But we thank the Sun Journal for implicitly making one of our major points: a rising tide does truly lift all boats—including government coffers.
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