On Jan. 1, working Mainers will ring in the new year with an unwelcome gift from State House Democrats: the largest blue-collar tax increase in decades.
Unless lawmakers can summon the common sense to kill off this ruinous program in its infancy, most Maine workers and businesses will be subjected to the new one percent tax on paychecks beginning next month.
The central planners in Augusta styled this wage theft as a payroll tax, with 0.5 percent coming from employees and the other half coming from business owners. However, economists generally agree that the burden of payroll taxes is completely borne by workers. So, at a time of still-high inflation, soaring energy costs (also driven by left-wing policies), and unusually low workforce participation, left-wing policymakers are taking one percent of Mainers’ paychecks and sucking hundreds of millions of dollars out of the Maine economy.
That means hundreds of millions of dollars will be sent to the Augusta bureaucracy rather than spent at local restaurants, hardware shops, and other small businesses. Instead of saving for your kid’s college expenses or investing in Bitcoin, you’ll be paying some wankers in Augusta to mismanage a gigantic experimental government program.
What can hardworking Mainers expect in return for the newfound paycheck shrinkage, apart from added bureaucratic complexity?
Nothing.
At least, not until Spring of 2026. That’s when the supposed “benefits” of the Paid Family and Medical Leave program become active. In an extreme version of Nancy Pelosi’s infamous ObamaCare quip, Democratic lawmakers contend that we’ve got to pay for the program a full 16 months before getting to see how it works. When (or if) the leave provisions kick in, Mainers can expect a genuine taxpayer-funded catastrophe.
[RELATED: Maine’s New Paid Leave Rules: Here’s What Businesses and Workers Should Expect…]
If you want to learn more about the details of the program, which are still unsettled and are trickling out of the Maine Department of Labor, you can follow Libby Palanza’s reporting on the topic here or here. But here’s the TL;DR: This one percent paycheck tax is going into a big bucket that’ll pay people to take 12 weeks off from work for almost any reason whatsoever.
Yes, yes, I know: It’s about maternity and paternity leave. Except it’s not. The law and its multiplicity of rules has created fertile ground for abuse, effectively allowing the leave provisions to be used for the flimsiest of reasons, with very little to verify whether those excuses are even true. If that sounds like a crap deal for the people who sign the front of the paychecks, it gets better: After an employee takes advantage of the paid leave program, business owners will be required to re-hire them. When they do, the shot clock will reset on when they can take their next paid vacation.
Employers who don’t think they can absorb a 12-week vacation without hiring a replacement (and later being forced to re-hire the replaced employee) can go to Augusta and fight an appeal with the left-wing ideologues at MDOL. Good luck. My prediction is that MDOL will side almost exclusively with workers, leaving businesses to cope with the chaos. Somehow, it still gets worse. By 2028, some unnamed third-party will be able to unilaterally jack up that paycheck tax without prior approval from the legislature.
As more and more people take advantage of the program, the impact on Maine’s businesses will be unpredictable and perverse, but almost certainly destructive. We can expect higher healthcare costs and longer medical office wait times, higher grocery costs, workplace dysfunction and decreased business investment, and more stressed-out business owners calling it quits or moving to other states.
Spare me the BS about how it’s insulting to Mainers to suggest people will take advantage of the paid leave bonanza. How has that worked out with PPP loans and EBT cards? Managers I’ve talked with are already making predictions about the problem employees who will be signing up for 12-weeks of paid vacation for flimflam reasons.
Don’t expect Democrats to suddenly change their tune on this slow-motion disaster, either. When Senate President Mattie Daughtry of Cumberland proposed this as a bill last session, nearly every Democratic pol signed on. Indeed, getting this idiotic scheme signed into law was the seminal achievement that propelled Daughtry to leadership.
[RELATED: Republicans Cheer on Mills as She Signs Largest Tax Increase in Decades…]
But there’s a slight sign of hope that Republicans may fight the paid leave boondoggle after getting steamrolled in the last session.
Rep. Josh Morris (R-Turner) on Monday unveiled an emergency bill that would totally repeal the scam program before it gets started.
“I believe that this new tax should be repealed because it’s time to lower Mainers’ cost of living as much as possible as quickly as possible,” Morris said Monday.
“Mainers are still dealing with the effects of high inflation, high gas, grocery, healthcare, and energy costs caused by Democrats’ out of touch big government policies, Republicans must fight harder than we ever have against these costly bad ideas and on behalf of Maine’s workforce,” he said.
Rep. Laurel Libby (R-Auburn) was quick to signal her agreement with Morris’s proposal.
“We need to repeal this tax immediately and focus on meaningful ways to reduce costs for families and businesses, not pile on new ones,” said Libby.
“Maine is already the 4th highest taxed state in the nation, and this payroll tax going into effect January 1st will only deepen the challenges our workers and small businesses face. Higher taxes drive businesses to close, discourage new investment, and ultimately cost Mainers their jobs,” she said.
Behind the scenes, some Republicans have suggested there are other efforts afoot to stave off this misguided scheme.
Morris’s bill isn’t likely to go anywhere, but if Republicans play their cards right they can at least make sure the working people of Maine know exactly who is to blame for their shrinking paychecks (hint: they were yucking it up at the White House this weekend).
Nevertheless, the blue collar people of Maine should all pray Maine Democrats can find it in their hearts this Christmas season to abort this calamitous government program before it takes a breath.
One of the myriad of problems with income taxation is that the government does not know how to spend a dollar better than the people do.
The other is that income taxation is very similar to the confiscation of private property that occurs in communist dictatorships.
Who ever said we have smart lawmakers!
As they say. 1% is just the Camel’s nose under—the tent. 1% then 2% the 3%. Nothing Changes. This is just like John Martin’s 1990’s workers comp fiasco when all the insurance companies left . Premiums skyrocketed until. MEMIC was established. Anyone want some more examples of the idiocies?
“But there’s a slight sign of hope that Republicans may fight the paid leave boondoggle after getting steamrolled in the last session.”
1st the yellow stain reDUMBlicans would have to grow a spine. Remember how they fought LePage. There is a slight chance it’s snowing in Hell also.
This Legislature has started a process with this law that will end up killing jobs by the thousands. The tax starts off at .5% on both employers and employees, but that’s just to set up the bureaucracy. Once they start paying benefits the plan is self funded by a tax on wages. A tax that will make Maine’s cost of doing business so high our products and services with be priced out of the market. In 1991 it took a government shut down by a Republican minority in the Maine Senate to solve the workman comp fiasco (another Democrat designed give away at employers expense). The repeal of this law isn’t going to be easy, but necessary if Maine wants any good jobs. Do we have Legislators with the courage?
Thank You Steve, Libby & all @ Maine Wire!! This will very well be the Coupd e Grace for perhaps thousands of both small & large businesses. I will tell all plainly that the second largest employer in the state, BIW will suffer greatly buy all of this. Like Obamacare we are painted a rosy picture of highly destructive anti-American Marxist “Hope & Change”. The good news is that this among other things- might just be what it will take to turn this state to some semblance of reality. Pain has a way of doing that. God Speed MW & “Drive On” 2025!