Maine Think Tank Wants No Taxes For Mainers Making Under $50k

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Disclosure: The Maine Wire is a project of the the Maine Policy Institute, a 501(c)3 non-profit dedicated to advancing free market principles, liberty, and limited government.

The Maine Policy Institute on Tuesday released a comprehensive budget analysis for the state of Maine that includes a proposal to cut all state income taxes for individuals making less than $50,000 per year.

If enacted, the proposal would amount to a nearly 6 percent increase in take home pay for the poorest Mainers.

MPI hopes the plan, which includes several other tax and spending reform proposals, will inform conversations around Maine’s biennial budget after Gov. Janet Mills releases her budget framework Wednesday morning.

MPI’s “Maine Budget Blueprint” is a 105-page alternative to the budgeting style that has come to dominate Augusta over the past four years. Rather than expand government, the MPI plan would seek to curtail regulations, cut taxes, and lower fees, especially for the poorest of all Mainers. The comprehensive document lays out how such a limited-government approach would work, and the benefits it would yield for the state economy.

The MPI plan makes a host of recommendations for policy makers, but the key feature of the plan is a tax reform proposition broken down into three potential avenues: ambitious, sensible, and cautious.

Under the “ambitious” tax plan, the state would totally eliminate the state income tax, along with several other smaller taxes. According to MPI projections, the economic growth stimulated in this scenario would actually lead to an increase in government revenues over the next four years.

Under the “sensible” plan, state lawmakers would reduce public spending by $3 billion, or roughly 24 percent, by consolidating the income tax into a single 4.5 percent bracket and eliminating all income taxes for all income earned up to $50,000. This plan would increase the take home pay of anyone in Maine making less than $50,000 by nearly 6 percent, making it one of the most progressive tax plans ever proposed in the state.

MPI’s “cautious” plan would eliminate a variety of state taxes and fees, such as the insurance premium tax, the real estate transfer tax, and the death tax, but it would leave the income and sales taxes unmodified.

Although the MPI plan is likely to fall on deaf ears in the Blaine House and Democratic caucuses, where Mills and Democratic lawmakers are typically skeptical of reducing taxes, even for poor people, the MPI plan will serve as an alternative approach to budget making in state government for conservative lawmakers.

Eliminating the state’s income tax and sales tax has long been a dream of Maine conservatives, especially former Gov. Paul LePage. But until now the actually details of how it could be accomplished while still funding the basic activities of government had never been well articulated.

You can review the budget blue print below:

Disclosure: The Maine Wire is a project of the the Maine Policy Institute, a 501(c)3 non-profit dedicated to advancing free market principles, liberty, and limited government.

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