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Maine Senate Republicans Revive Controversial Income Tax Bill
03/30/2012   Reported By: A.J. Higgins

Democrats thought the end was near for a major tax reform bill earlier this week when the House narrowly defeated LD 849 in an initial vote. But majority Republicans rallied in the Senate today and sent the bill back to the House with some changes. The GOP lawmakers say the bill will eventually drop the state's income tax rates to a flat 4 percent, but Democrats counter that the measure is actually a money grab that benefits Maine's wealthiest citizens.

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As a major reform effort, the Republicans' LD 849 bills itself as an act to provide tax relief to Maine's citizens by reducing taxes. It operates on the assumption that in times of revenue surpluses, those tax collections should be used to lower the state's overall tax rate.

Under the measure, surplus state revenues would be used to gradually lower Maine's income tax rates to a flat 4 percent. Republicans like to refer to the proposal as a tax relief plan, but Democrats have another way of looking at the amended bill.

"In essence this amendment puts lipstick on a pig--the bill is still a TABOR, a version of TABOR," says Rep. Seth Berry.

Berry, a Democrat from Bowdoinham, is referring here to TABOR--or the "Taxpayer bill of Rights" proposals that have been rejected repeatedly by Mainers at the polls. In fact, Democrats thought the bill might be on its way out after it was defeated in a House vote earlier this week.

Berry says the bill will ultimately have a devastating impact on the state's ability to provide basic services.

"It rachets down revenue over time," he says. "Fully-implemented, Maine would lose $600 million that would otherwise go back into our communities, that would go to fund our schools and build our roads. It would be an enormous hole. It is a vastly unfair proposition because once it's fully implemented, $21,000 apiece go to the wealthiest 1 percent of Mainers and only $1 would go to a single parent working full-time, minimum wage, or an elederly person depending on Social Security on a fixed income."

"The only people that suggest that it even remotely looks like TABOR are the D's and where they came up with that analogy, I'm lost because it has nothing to do with TABOR," says Rep. Gary Knight.

Knight is a Livermore Falls Republican and the House chair of the Taxation Committee. He says the Democratic arguments against the bill fail to recognize the need for the state to reduce Maine's tax rate, and that LD 849 does so without adversely impacting property taxes.

Senate Majority Leader Jon Courtney, a Springvale Republican, offered changes to the bill that he says should resolve some of the concerns voiced in the House, where the bill was voted down.

But Sen. Chris Johnson, a Democrat from Somerville, said the bill would drain revenue from the state and shift costs to muncipalities in an effort to provide maximum tax cuts for those in the top tax rate. "While that benefits the richest 1 percent, it hits struggling Mainers with higher property taxes," Johnson told colleagues.

Courtney said he would not abandon the Republican goal of lowering the tax rate in way that provides the maximum tax benefit to the Maine's richest residents.

"Well, you know, we can play class warfare, but I'll tell you what, if we don't get the top tax rate down in this state, we're never going to be competitive, attracting people to invest in this state to create jobs," Courtney said. "So I'm not afraid to cut the top tax rate. I'm not afraid to have the top tax rate in this state be 4 percent. I think that's good policy. It's good policy that everyone can benefit from."

Republicans say they are confident the newly-amended bill will be approved when it reaches the House next week.



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