Op/Ed: Republican tax cuts benefit all Mainers

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By David Sorensen

Maine Republican Party

The 125th Legislature of 2011-12 passed the largest tax-cut package in Maine’s history as a part of the biennial budget, LD 1043. Democrats have been railing against this package in the editorial pages, calling it a tax cut for the rich. They leave out two facts that destroy their credibility.

First, they voted for it. The budget passed 123-19 in the House and 29-5 in the Senate. They did so reluctantly, however, with House Minority Leader Emily Cain eventually commenting, “My caucus hates these tax cuts. It hates them.”

Second, the Democrats’ own tax package, enacted by LD 1495 in 2009, gave an average $6,238 tax cut to 5,000 Mainers earning over $333,000 per year, while raising sales taxes on everyone, hitting the lower- and middle-class especially hard by penalizing such things as car repairs and meals.

This was not real tax relief, but a tax-shift gimmick that was repealed as such by the voters in 2010.

Republicans, on the other hand, delivered real reform. Specifically, the Republican tax cut package of 2011:

• Changes the four old income tax rates, which were 8.5%, 7%, 4.5% and 2%, to three rates at 7.95%, 6.5% and zero percent;

• Raises the amount of income exempt from income taxes from the first $21,000 to the first $35,750;

• Raises the death tax exemption level from $1 million to $2 million (federal is $5 million), helping small businesses and family farms;

• Creates the New Market Investment credit, which encourages development in economically distressed areas of the state;

• Conforms to the more generous federal deduction for married couples filing jointly;

• Eliminates the tax on lump-sum retirement plan distributions;

• Eliminates the Alternative Minimum Tax (AMT);

• Exempts meals provided at nursing homes from the sales tax;

• Refunds the sales tax on fuel used for commercial fishing;

• Provides an income tax credit for investment in fisheries infrastructure;

• Exempts the sales tax on aircraft and parts, to aid development of the former Brunswick NAS;

• Exempts bags provided at redemption centers from sales tax; and

• Restores the Business Equipment Tax Reimbursement (BETR) program.

The effects of these changes are significant:

Over $150 million will be returned to taxpayers over the biennium—an average of $115 for every man, woman and child in Maine—or $577 for a family of five.

About 460,000 households will see an average cut of $337.

Approximately 70,000 Mainers will no longer pay income taxes.

The Beacon Hill Institute at Suffolk University calculated that the tax cuts will generate at least 3,700 jobs by 2015 and increase Mainers’ disposable income by over $270 million.

The 80 percent of taxpayers in the low- and moderate-income groups pay only 24 percent of the state’s total income tax revenue, but will receive 33 percent of the cuts.

A family of four with an AGI of $50,000, using the standard deduction, will enjoy an income tax cut of $300—a 24.4 percent reduction.

Despite a $994 tax cut in 2012, the richest 10 percent (over $119,000) will see their share of total income taxes collected rise from 55 percent to 57 percent, while the percentage of the burden paid by all other income groups will decline.

Middle-income families can expect a cut of about 15 percent, while families in the top 10 percent will see an average reduction of 8.4 percent.

As you can see, the Republican-led tax cut package of 2011 is not slanted toward the rich. But it does benefit all Mainers by providing real tax relief that puts more money into the pockets of hardworking Mainers and more money into the private sector economy.

This is what Republican legislators promised on the campaign trail in 2010, this is what they delivered, and this is what they will continue if given majorities again in the 126th Legislature of 2013-2014.

David Sorensen is the communications director for the Maine Republican Party. For more information, see www.mainegop.com.   

1 COMMENT

  1. this type of publication is valuable and we can take the points that mean the most to a nay sayer and consolidate to impress them with what means the most to them. If I used the whole article many would find it too long to bother, having a list to choose from makes it possible to target many people. thanks

  2. From the
    Congressional Budget Office, “Changes in CBO’s Baseline Projections Since January
    2001”, dated June 7, 2012, states the following:

    “In
    January 2001, CBO’s baseline projections showed a cumulative surplus of $5.6
    trillion for the 2002–2011 periods. The actual results have differed from those
    projections because of subsequent policy changes, economic developments that
    differed from CBO’s forecast, and other factors. As a result, the federal
    government ran deficits from 2002 through 2011. The cumulative deficit over the
    10-year period amounted to $6.1 trillion—a swing of $11.7 trillion from the
    January 2001 projections.”[1]

    The data
    provided indicates the current national debt is a combination of tax cuts,
    bailouts, discretionary spending and interest between 2001 and 2011, and less
    than expected growth.

    ·
    In January 2001, President George H. Bush
    inherited a $5.6 trillion surplus.

    ·
    Revenues during the 10 year period were decreased
    by $6.1 trillion through tax cuts of $2.8 trillion (Bush and Obama) and $3.1
    trillion as a result of the economic downturn.

    ·
    Outlays during the 10 year period were increased
    by $5.6 which included discretionary spending ($2.9 trillion), bailouts, tax
    break costs, Medicare prescriptions ($1.4 trillion) and interest ($1.3
    trillion).

    Taking the
    $6.1 trillion revenue decrease and $5.6 trillion outlay increase, the swing is $11.7
    trillion.

    This begs
    the following questions:

    ·
    Why did the United States maintain tax breaks
    during the Iraq conflict, an unplanned outlay?

    ·
    Why would the United States maintain tax
    breaks during an economic downturn?

    Also, where
    is the money from the Bush era tax breaks and the Bush / Obama bailouts?

    Answer: (from 1990 to 2007)[2]

    ·
    The proportion of after-tax income for the top
    1% as compared to total after-tax income increased from 11% to 17%.

    ·
    The
    proportion of after-tax income for the remaining 99% as compared to total
    after-tax income decreased from 89% to 83%.

    The answer
    begs further questions:

    ·
    Why should someone get a tax-break in the hope
    they will invest and create jobs?

    ·
    Shouldn’t the tax break come after the
    investment has demonstrated a net increase of jobs? In other words unemployed
    individuals are now employed.

    ·
    Shouldn’t the tax break come if the investment
    failed in creating jobs in the form of a tax deduction?

    ·
    Of the top 1% or even top 20% who calls themselves
    job creators and whose after-tax income has grown; have they invested in job
    creation?

    ·
    If not what are they waiting for? They’ve been
    getting tax breaks for years and unemployment is growing.

    Regarding
    the deficit; as part of the 1990 federal budget agreement, the PAYGO rule was
    implemented. The pay-as-you-go rule required any reduction in taxes or
    increases in mandatory spending (entitlements) be balanced with some
    combination of tax increases and mandatory spending cuts. A tax reduction of one
    type would be offset by a tax increase of another type and / or increase of
    mandatory spending of one type offset by mandatory spending decrease of another
    type.

    The PAYGO
    statute expired in 2002 and not continued due to Republican opposition. A
    version of PAYGO was reinstated in 2007, but repealed in 2011 by the
    Republicans. In its place CUTGO was implemented. Any spending increase had to
    be offset by a spending decrease; leaving tax cuts exempt from offsets.[3]

    Tax breaks
    have contributed negatively to the deficit, tax breaks have not contributed to
    job creation with respect to reduced unemployment, and tax breaks have not been
    removed to address the deficit (even on a temporary basis). Rather tax breaks
    have contributed to the wealth of a small minority at the expense of the
    majority affecting standard of living, personal health, education, and one’s
    quality of life. How this has occurred and continues through partisan politics is
    deceitful, the results immoral.

    [1] “Changes
    in CBO’s Baseline Projections Since January 2001”

    http://www.cbo.gov/sites/default/files/cbofiles/attachments/06-07-ChangesSince2001Baseline.pdf

    [2]
    Peter G. Peterson Foundation; http://www.pgpf.org/Chart-Archive/0022_top-income-growth.aspx

    [3] Thomas
    Mann and Norman
    Ornstein, “It’s Even Worse than It Looks”, Basic Books (May 1,
    2012)

  3. Hi!
    How can the Maine legislature lawfully “steal” the labor from the people by incorporating the income tax plus other taxes?
    There is no such delegation of authority in the constitution of the State of Maine to steal the people’s labor by having them pay for an income tax, sales tax, federal tax, medicare tax, property tax, etc., etc., etc.

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