Robin Hood: Democratic Leaders Contemplate Massive Tax Hikes for Maine

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AUGUSTA – Lawmakers at Tuesday’s public hearing of the Taxation Committee heard testimony for an amorphous blob of policy proposals that could become the largest middle class tax hike in Maine history.

The handful of tax proposals will likely become one omnibus bill, but the basic elements of the final proposal Democrats will produce are predictable: repeal of the 125th Legislature’s tax cut and the creation of a new Robin Hood Assessment.

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The hearing began with a bill from Rep. W. Bruce MacDonald (D-Boothbay) to repeal tax cuts passed in the 125th Legislature. Although the purpose of MacDonald’s bill (L.D. 692) is to ensure the state fulfills its commitment to fund 55 percent of Maine’s education spending, it is unclear whether Democrats have the authority to earmark a portion of their middle class tax hike for education.

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MacDonald’s bill, like several other Democratic proposals, modifies  income tax brackets with progressively higher rates for individuals making more than $137,500 and households making more than $206,250. Under his plan, the top bracket for joint filers would begin at $275,000 and equal $20,634 plus 8.5 percent of the excess over $275,000.

The most likely vehicle for the Democrats’ middle class tax increase is L.D. 1113, introduced by House Majority Leader Seth A. Berry (D-Bowdoinham) and co-sponsored by Senate President Justin L. Alfond (D-Cumberland).

Berry described his bill as a takeoff of the so-called Buffet Rule – named after the famous billionaire who shilled for President Barack Obama during the 2012 campaign. (Remember, Warren Buffet, the guy who bought Dexter Shoes and sold it overseas?)

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Berry’s bill proposes to “establish a tax equalization assessment on those income filers who have an annual income equal to or exceeding $250,000.”

According to the bill’s summary:

“The tax equalization assessment must bring the total effective state and local tax rate of these tax filers to the average rate paid by all other Maine households, as determined by the Department of Administrative and Financial Services, Bureau of Revenue Services.”

 

“The bill also proposes to establish a tax equalization credit for those income tax filers who have an annual income below $125,000, but who pay a total effective state and local tax rate that is significantly higher than the average effective state and local tax rate for all other Maine households. The tax equalization credit may be structured as an expansion of an existing credit or refund or may replace and enhance such credits or refunds. The tax equalization credit must be funded entirely by the tax equalization assessment and must bring the total effective state and local tax rate of these tax filers as nearly as possible to the average rate paid by all other Maine households…”

Berry said that by levying this assessment, which is definitely not a tax rate increase, on individuals of high net-worth the state can give $100,000,000 in tax breaks as they see fit. According to his own testimony, the tax he is proposing will only affect roughly 4,500 individuals. That works out to an increase of more than $22,000 in taxes for these individuals.

This assessment, said Berry, will address Maine’s growing wealth inequality.

“L.D. 1113 would address these inequalities,” said Berry. “More importantly, it would help us deal with the revenue cuts in the Governor’s biennial budget.”

“This bill does not raise [tax] rates at all,” said Berry.

[RELATED: Report shows Mainers flee to states with no personal income tax…]

Berry’s proposed tax increase – in his words, “assessment” – will be applied after the Maine Revenue Services has collected regular taxes, calculated the average tax rate Mainers paid, and determined how much to assess high income earners whose rates were too low.

“Some will say the wealthy already pay too much tax. And that’s true in some cases,” said Berry.

However, he said his bill was politically, morally, and economically the right thing to do.

“Politically – the Buffet Rule is supported by 4 in 5 Mainers… Economically – research shows fair taxes lead to growth… Finally, morally – Maine people have always believed we should each do our fair share.”

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Republicans on the Tax Committee offered questions to those presenting their tax hike bills, but could do little in the face of so much Democratic enthusiasm over the possibility of new revenues.

“We know what this is about,” said Sen. Doug Thomas (R-Somerset). “This is about beating up on the governor,” he said.

Thomas said he did not know where the Democrats planned to find all the rich people they intend to tax.

“If they find some rich folks to pay for tax hikes, they won’t stay in the state for long,” he said.

One Republican, Sen. Thomas Saviello (R-Franklin), also joined the middle class tax hike movement.

Rep. Terry M. Hayes (D-Buckfield) introduced LD 834, An Act To Make the Income Tax More Equitable for Citizens of the State, on Saviello’s behalf, because tax bills must originate in the House.

“When I was on the campaign, I never got thanked for cutting taxes,” he said.

He said it was difficult for him to explain to constituents that the tax reform passed by Republicans eliminated income taxes for 70,000 of Mainers poorest individuals and families.

“I had to make a statement. That was important,” he said.

His bill would “reinstate” the 8.5 percent rate for the top income bracket – i.e. repeal LePage’s tax cuts. Unlike MacDonald’s bill, the Saviello-Hayes bill does not try to dedicate new revenues to education; like MacDonald’s bill, and other Democratic tax schemes, it creates three income brackets and considers $250,000 the line demarcating the middle class from the wealthy.

Saviello also used his time at the podium to give Democrats a lesson on how to use the rhetoric of class warfare and beguile “rich” Republicans.

When he introduced his tax hike bill, Saviello said he got a lot of angry phone calls from Yarmouth – the town’s name serving as a euphemism “the wealthy.”

He then insinuated that Rep. Gary Knight (R-Livermore), one of the only lawmakers on the Taxation Committee skeptical of raising taxes on the middle class, would oppose his bill because he is personally wealthy.

By S.E. Robinson
Maine Wire Reporter

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7 COMMENTS

  1. The Democrats have gone insane. Berry is flat lying about his scheme isn’t a tax increase. Saviello is a traitor and has no business calling himself a Republican.

    We need to fight this evil scheme of Augusta Democrats. There aren’t enough ‘wealthy’ Mainers to tax that will make any impact on the Democrat created budget shortfalls. All this will do is increase the misery index of working Mainers and threaten businesses, thereby threatening jobs.

  2. People can not afford to pay additional taxes. With land and other property being placed in tax exempt Trusts as well as excessive spending by all levels of government, people are being forced to rent or sell their private property. Let’s have an itemized list of spending for similar accounts across local, state and federal governments. And ID what % of each tax bracket is paying for this. Numbers tell it all.

  3. Sadly, I have registered cars in both Maine (back in the 1990s) and yesterday in Florida. The registration cost for my 2010 car ($34,000 MLP) was $78. There are no annual inspection requirement in Florida. And no state income tax. The sales tax is the same as Maine. When I was a property owner in Florida the property tax rate was lower than for my place in Coplin Plantation, an unorganized township with no schools or most other municipal services. I lived 24 years in Washington DC. Over that period I saw the DC income tax rate, once one of the highest in the country, fall to well below Maine’s income tax rate. Which raises a very tough question. How can states like New Hampshire, Texas and Florida manage to run themselves without this oppressive rate of taxes imposed in Maine. Texas, with a Republican governor, has the strongest economy on the country. Florida, another GOP governor and legislature, has begun a strong turn around. Jobless rate is falling very fast, housing market is turing around. Most of the red states with Republicans currently are in recovery, while the tax and spend liberal run states like California and Illinois are stuck in recession.

  4. I’m a CPA who practices in Maine, NH and Mass. I’ve worked with many clients who have moved to this area of New England and seek my counsel on which state they should live in and where they should locate their businesses. 99% of the time, I recommend NH. I live in Maine because I like the community in which I live. I held out hope that things would improve in Maine when a Republican governor and Republican legislature finally starting making the hard choices that were necessary to get Maine back on its feet. The new Democratic legislature is trying to reverse all those gains. As much as I’d like to remain in Maine, I will ultimately reach a point where my dislike for Maine government and the Maine welfare state will exceed my desire to stay in the comminty where I live; and I won’t be the only one. Leave the Democrats in power and Maine will become a smaller version of California and Mainers will have no one to blame for themselves because instead of educating themselves on how things really work and taking responsibility for themselves, they will continue to drink the Democratic kool-aid and believe there is an endless supply of money to spend on wasteful government programs.

  5. A few more years and I’ll be gone, the leftist carpetbaggers and local koolaid drinkers can wallow in their stupidity! You can’t make this up Seth Berry is an idiot, Alfond is a pampered jackass that has never worked in his life! This is what represents the state? This is pathetic!

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