Proponents of the Universal Home Care tax plan were either caught by surprise or caught red-handed when the Maine State Economist at the Department of Administrative and Financial Affairs released a detailed and devastating analysis of the proposal. Those of us who have been wary of the disingenuous claims made by the initiative’s proponents were not surprised to hear the economist found the proposal would have a calamitous impact on Maine’s economy.
The analysis found that the enactment of Question 1 would be detrimental to Maine’s economy. Over the next five years, the proposal would substantially reduce Maine’s population, overall labor force, private non-farm employment, personal income and real GDP relative to baseline forecasts.
According to the State Economist’s report, cumulative personal income losses from 2019 to 2023 are estimated at $1.4 billion to $2 billion, while real GDP losses over the same period are estimated at $643 to $916 million.
It’s worth noting that, like Maine Revenue Services, the Maine State Economist too identified a “marriage penalty” in the Universal Home Care ballot initiative. The report reads: “As currently drafted, the proposed question would apply to all Maine households filing taxes, whether individually or jointly, thus establishing what can be considered a ‘marriage penalty’ on couples whose individual income is less than $128,400 but whose combined household income exceeds it.”
The report subsequently explains through multiple examples that workers who earn less than $128,400 and file individual returns would not be subject to the tax, but if they are married filing jointly and their combined household income exceeds that amount, they would be taxed to fund the new bureaucracy established under Question 1.
This raises many questions. Why do liberal special interests want to impose a marriage penalty on Maine taxpayers? Why do those pushing this proposal – the largest tax increase in Maine history – want to levy an immense financial penalty on those filing household incomes?
Rather than speculate the intentions of the plan’s proponents – like George Soros and the Maine People’s Alliance – I wonder if perhaps they didn’t realize their plan would so disparately impact married taxpayers. Perhaps they didn’t realize the way the law is written would create a “marriage penalty” at all.
Intentions aside, the proposal is yet another example of how attempting to legislate through ballot initiative can be fraught with unintended consequences and great financial risk for taxpayers.