Gang of Eleven tax plan changing on eve of public hearing

AUGUSTA – The Gang of Eleven’s tax plan is only one week old, but supporters say the version that emerges from the Taxation Committee will look quite different from the draft bill presented to the public last Wednesday.

According to Rep. Gary Knight (R-Livermore Falls), lead sponsor of the bipartisan group’s plan, supporters of his bill are already discussing ways to make the complex tax overhaul more palatable for Mainers.

“The final bill will not tax home heating fuel,” said Knight. He added that the Taxation Committee, on which he is the top House Republican, would make changes to the plan in order to ensure that businesses do not get hammered with higher taxes on the goods and services they purchase. (Recommended: Gang of Eleven Touts Tax Increase…)

Supporters believe the plan’s added tax burden will be shoulder by out-of-staters, but have yet to produce any research or analysis supporting the contention.

“We do not have an estimate of the impact on residents versus non-residents,” said Sen. Richard G. Woodbury (U-Cumberland), the economic guru whose help was pivotal in crafting the plan.

Woodbury thinks non-residents will pick up most of the new tax bill and said the Maine Revenue Service will be supplying their assessment of the plan shortly.

“The plan is based on good philosophical principles,” said Woodbury.

Assistant Senate Minority Leader Roger J. Katz (R-Augusta) said the Gang of Eleven has put forward their tax reform idea and that its fate now rests in the hands of the Democrat-controlled Taxation Committee.

Katz was not immediately familiar with changes to the plan being discussed by Knight and other gang members, but said he hopes the plan doesn’t become a bundle of “carve outs” for special interest groups.

For example, Katz, who is a lawyer, said he is not personally in favor of taxing legal services, but that special carve outs were one of the drawbacks of L.D. 1495, a similar tax reform effort that was defeated by a people’s veto two years ago.

“Carve outs add complexity and lack fairness,” said Katz.

Katz reiterated his belief that the tax plan is a thoroughly Republican piece of legislation. “This is good, sound policy based on Republican principles,” he said.

As for the likelihood that the tax reform package passes the full legislature, Katz said both Republican and Democratic leaders have yet to warm to the proposal.

“Leaders on both sides are being cautious,” said Katz. “The GOP is afraid Democrats will paint them as wanting to give tax cuts to the rich. The Democrats are afraid that the GOP will paint them as wanting new taxes,” he said. “It’s going to require political courage.”

Katz said that the final vote on the Gang of Eleven proposal could be held over until next summer when the Legislature reconvenes.

The top Senate Republican on the Taxation Committee Sen. Doug Thomas (R-Somerset) has been an outspoken critic of the plan. He called the plan “ill-conceived at best” and said the Gang of Eleven has offered a moving target in order to deflect criticism.

“They’re going to change everything necessary to get us to swallow this plan,” said Thomas. “But now their numbers don’t work.”

“They’re like used car salesmen convincing us to buy a lemon,” he said. “They’ll tell us anything we want to hear.”

The public hearing for the Gang of Eleven’s proposed tax increase is scheduled for Friday morning at 10:30AM in the State House.

S.E. Robinson
Maine Wire Reporter
srobinson@mainepolicy.org