A new report from the Tax Foundation analyzes the burden imposed by states upon their residents, taking into consideration sales taxes, income taxes, property taxes, and more.
Despite finding itself in the middle of the pack overall, a closer look at the details shows that Maine stands out on both the positive and negative ends of the scale.
The primary factor boosting Maine’s placement on the list is its relatively low sales tax rate, which was found to be the 9th best in the country.
Two categories in which Maine was found to neither particularly good or bad were individual income taxes and unemployment insurance taxes.
Bringing Maine’s score down substantially, however, were both its corporate taxes and property taxes, both of which were found to be in the bottom ten nationwide.
According to the Tax Foundation’s analysis of Maine’s tax landscape overall, the state outperforms most of its New England counterparts despite falling slightly below average nationwide.
That said, New Hampshire serves as the exception to this trend, coming in at a remarkable 3rd due in large part to its lack of both income and sales tax.
With respect to property taxes, however, New Hampshire fares only slightly better than Maine with a 44th place ranking, just once notch higher than Maine.
It is explained in the report that Maine’s property tax structure earned such a low ranking due to “high rates, its levying of both an estate tax and a real estate transfer tax, and its taxation of tangible personal property without a de minimis exemption.”
The Tax Foundation points out, however, that this serves as a “trade-off” for the absence of local sales taxes.
Regarding corporate taxes, the group cites Maine’s “throwback rule” as raising the burden on Maine-based businesses when they sell tangible property into states “with which they do not have a nexus.”
Also noted is Maine’s lack of first-year expensing for C corporations, a policy that they suggest “discourages in-state investment.”
Despite this, the Tax Foundation does point out that its “conformity to the Section 179 expensing allowances makes [Maine’s] treatment of small business investments more competitive than some of [the state’s] peers.”
