Democratic Gov. Janet Mills endorsed the largest state tax increase on Maine workers in more than two decades Thursday with an op-ed published in a liberal Portland newspaper.
“I have repeatedly said I am opposed to increasing taxes,” Gov. Mills said, before going on to explain why she was supporting the tax increase contained in a Democrat-backed paid leave proposal.
[RELATED: Appropriations Committee Approves $800 Million Spending Package in Early Morning Vote…]
In the governor’s view, supporting the Legislature’s tax increase proposal as part of an $800 million spending bill is the better alternative to a far left proposal coming this fall as a referendum, as apparently she’s ruled out using her political power to help defeat the referendum.
“I have to measure my concerns about those costs against the prospect of a referendum that would likely result in a payroll tax anyways,” she said.
Although Democrats supporting the proposal have said passing the legislative proposal would save Maine from the ballot referendum, nothing in Maine law would prevent the referendum from passing after Mills signs the proposal.
The tax increase Mills backed on Thursday will be used to pay a third-party contractor to manage a paid family and medical leave program.
The activist support for the proposal has come mainly from Portland area nonprofit groups funded by progressive dark money funds like Arabella Advisors.
Opposition to the policy has mainly come from business groups, which argue the added costs will make doing business in Maine more difficult. Larger businesses also argue that they should not have to pay the one percent payroll tax if they already offer their employers more generous paid leave programs.
The program will eventually allow workers to take up to 12 weeks off from work while getting a wage reimbursement from the state, so long as they’ve been employed for at least 120 days. Employers would be forced to rehire them to an equivalent position.
While some of the broad details are included in the bill, much of the finer rules have been left to Department of Labor rule-making process. This includes how replacement wages will be calculated and how the fund will operate.
That means the precise workings of the bill will only become apparent years from now as state bureaucrats implement it, a fact even supporters of the bill admitted during legislative debate on the bill.
The far left referendum contains progressively steeper tax increases and stricter rules on employers. It also has more lax rules on when workers can take time off. The referendum version also includes fewer exemptions for small businesses and larger businesses that offer better leave plans.
The interplay between the referendum versus the legislative proposal has been a point of controversy.
Republican lawmakers have said the referendum was like putting a “gun to their head” and forcing them to choose between the lesser of two evils.
Sen. Mattie Daughtry (D-Cumberland), the top Democrat advocate for the proposal, has said publicly that passing her bill would render the referendum null and void; however, this is false.
Nothing in Maine law would prevent the referendum from becoming law should Mills sign the less progressive version of the policy first.
There’s also no guarantee that the Democrats’ new payroll tax will remain at one percent once the program becomes operational.
According to the fiscal note for the bill, it’s expected to cost more than $360 million per year once the program is up and running.
However, those costs could easily exceed forecasts.
Milliman, Inc., the firm that provided actuarial analysis for Maine’s “Commission to Develop a Paid Family and Medical Leave Benefits Program,” has lowballed the cost of government progressive policies in the past.
In Illinois, for example, Milliman’s analysis of extending Medicaid coverage to illegal aliens drastically underestimated the number of new enrollees who signed up for the program. As a result, expanding the program wound up costing twice as much as Milliman forecasted.
Part of the problem with making policies based on actuarial analysis is that it’s difficult to incorporate human nature and how people will respond to artificially imposed government incentive structures.
Actuarial analysis can’t predict, for example, how workers might exploit weak provisions or react to perverse incentives within a given law, or how black swan economic events might overturn their mathematical models.
Should the number of Maine workers who are taking paid leave, and therefore drawing wages from the new tax fund, exceed the state’s estimates, then policymakers will be faced with the choice of whether to curtail benefits or further increase taxes.
According to a 2023 report from WalletHub, Maine already has the 3rd highest tax rate in the United States.
Republican leaders have previously panned the Democratic plan to raise taxes for the program, preferring instead the adoption of a voluntary model like the one recently adopted by neighboring New Hampshire.
<span class="dsq-postid" data-dsqidentifier="20614 https://www.themainewire.com/?p=20614">6 Comments
Perhaps this is off-topic, but is mortician doing Janet’s make up
You just opened the door for every working person in Maine to get a 3 month paid vacation. Nice job!
Hey Janet, if you like California so much, MOVE THERE AND TAKE YOUR MARXIST PARTY WITH YOU!
as always, the DemoCommunists continuer their lies and the people of Maine just soak it right up.
Well, someone has to pay for all the lay-abouts she is making and bringing in. Add to that the demoKKKrats have been spending money like drunken sailors, eventually they had to run out of other peoples money to speed. So what to do? Steal more from the working tax payer. I’m getting older and on my way out. Please take my word for this, it is how I feel. I hope all of you socialist, let the Gov. take care of everyone, Live a LONG, LONG, LONG life in the world you are creating.
‘The program will eventually allow workers to take up to 12 weeks off from work while getting a wage reimbursement from the state, so long as they’ve been employed for at least 120 days. Employers would be forced to rehire them to an equivalent position.’ So, if you work less than half a year you can take three months off with the people of Maine paying your salary!! I am sorry, why should anyone need to take three months off? Companies allow for maturity leave, sick leave etc etc… Now this Democrat run government want to encourage people to work less and get paid for doing nothing. STOP the grifting.. We pay enough taxes and now they want us to pay more to support those who do not want to work… Maybe these funds are going to another group…. Those here illegally who are bleeding the state dry. Mills needs to GO!