According to a recent report from the non-partisan Tax Foundation, manufacturers in Maine suffer under substantially higher taxes than the rest of the country.
“Maine includes equipment in its property tax base, which contributes to an above-average property tax burden for mature capital-intensive manufacturing firms, which experience an effective tax rate of 17.6 percent, two-thirds higher than the median tax rate on this firm type. The state’s 8.93 percent income tax and throwback rule are also substantial contributors to this firm’s high tax burden. Similar factors give the state a 44th place ranking for mature labor-intensive manufacturing firms, which experience the second highest corporate income tax burden for the firm type.”
The report, Location Matters: The State Tax Costs of Doing Business, ranks Maine almost dead last (48th) for its taxes on mature capital-intensive manufacturers. One reason for Maine’s above-average taxes on manufacturers is that equipment is included in the state’s property tax base. Therefore, Maine manufacturers are subject to much higher property taxes than they would be in other states.
And while “[p]roperty taxes are more important to capital-intensive manufacturing operations than they are to labor-intensive operations,” Maine similarly ranks 44th for taxes on labor-intensive manufacturers.
Employment by manufacturers in Maine has been declining in Maine for some time, possibly due to the disadvantage of Maine’s high tax burden.
While Maine manufacturers suffer from an uncompetitive tax environment according to the graphic above, Maine call centers fair well when compared against the rest of the nation.
The Tax Foundation study is unique in its comparison of taxes across several types of real-world businesses. Unlike the Tax Foundation’s annual State Business Tax Climate Index which takes a look at states’ tax climates as a whole, Location Matters attempts to answer how different types of businesses fare under each state’s unique tax structure.
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