LePage’s Income Tax Constitutional Amendment Bill LD 1367 Offered in Committee

Posted on May 7, 2015. Filed under: Uncategorized | Tags: , , , , , |

freHouse Minority Leader Ken Fredette (R-Newport) spoke before the 127th Legislature’s Taxation Committee this week regarding Governor Paul LePage’s bill LD 1367, “RESOLUTION, Proposing an Amendment to the Constitution of Maine To Eliminate the Income Tax” (photos).

From Democratic press release:

    Top Democrats on the Taxation Committee are raising strong concerns about the Governor’s proposed Constitutional amendment to abolish the income tax by 2020 ahead of today’s hearing on the bill.

    “We are going to be raising strong concerns during the hearing. The Governor’s bill is reckless and unpaid for. It provides huge tax breaks to the wealthy at the expense of the rest us,” said Rep. Adam Goode, D-Bangor, House Chair of the Taxation Committee. “Working families will see increasing property taxes, while investment in our students and workers will be gutted. It is terrible recipe for our economy.”

    According to the Legislature’s Office of Fiscal and Program Review, the proposal would cost $1.7 billion per year. It would force cuts in K-12 and higher education, with the majority of the benefit going to those with incomes greater than $392,000. Maine spends close to $1.2 billion on K-12 and higher education and $750 million on health care for children, seniors, and people with disabilities. Even if the governor cut all state funding for education and half the funding for health care, there still wouldn’t be enough money to cover the cost of eliminating Maine’s income tax.

    According to an analysis from the Maine Center for Economic analysis, the top 1 percent of Mainers – 7,000 households with incomes greater than $392,000 – will get a $61,000 income tax cut on average and account for 26 percent of the total amount. Meanwhile, middle-income Mainers – 140,000 households with incomes between $38,000 and $60,000 – will get a $900 income tax cut on average and account for less than 8 percent of the total, while property taxes and sales taxes rise.

    “Eliminating the income tax may sound great at first glance. But doing so would be reckless to both our state budget and local town budgets everywhere. It would force severe cuts like closing down every public school and college campus in Maine or raising the sales tax to 15 percent,” said Democratic State Senator Nate Libby of Lewiston, who serves on the Taxation Committee. “This is more of a political sound bite than a serious proposal.”

Here is video along with questions from committee members.

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(UPDATED x2) Governor LePage Forgets Wife’s 2nd Florida Home While Attacking Other Mainers For Having Same

Posted on March 19, 2015. Filed under: Uncategorized | Tags: , , , , , , , |

A second 3/19/15 UPDATE, as Governor LePage’s office this morning sent out a revised version of the weekly address eliminating his swipe at Maine residents and private citizens Stephen King and Roxanne Quimby. The following bolded message from press secretary Adrienne Bennett accompanied the latest version:

    “Correction: Please see the attached revised version of this week’s message. Please use this audio file in future broadcasts. Thank you.”

Here is the updated weekly address as sent out today (AUDIO LINK).

    Radio Address: Eliminating the Income Tax Means a Pay Raise for Hardworking Mainers

    March 19, 2015

    (Photo by Jim Bowdoin, provided by Governor LePage's office)

    (Photo by Jim Bowdoin, provided by Governor LePage’s office)

    Forty-six years ago Democratic Governor Ken Curtis championed a controversial state income tax. So it began; Mainer’s paychecks were raided to pay for bigger government.

    Hello, this is Governor Paul LePage.

    In 1969, the income tax barely survived the Legislature, and today $1.2 billion dollars is taken from hardworking Mainers through income tax.

    Nearly fifty years later, we are trying to return money back to Mainers, but it’s not without a major battle. This week, Democratic Representative Adam Goode of Bangor opposed our plan saying it only benefits the rich.

    However, his definition of rich is interesting. Most Maine businesses are pass through entities meaning many of those earning 400-thousand dollars are actually small businesses owners. These are the businesses that create jobs and invest these tax cuts creating career opportunities.

    Also, what Rep. Goode fails to mention is that 653-thousand working Mainers pay over one billion dollars – 1.2 billion to be exact – in income taxes.

    Our plan returns that money back to working Mainers. Starting next year, Mainers will receive $238 million annually back in taxes and that number increases to $300 million in four years.

    Our plan helps those earning lower incomes, too. We’ve set aside $60 Million to the neediest Mainers through the Sales Tax Fairness Credit and the Property Tax Fairness Credit. These tax credits are available only to those of more limited means.

    The Property Tax Fairness Credit will help Mainers with their property taxes. We’ve doubled the amount of money available to Mainers under 65 and with limited incomes. We have also tripled the amount of money available through the Homestead Exemption. This tax credit helps Mainers over 65 to lower their property taxes.

    Another way we help folks with lower incomes is by providing a tax credit toward the sales tax. Those with limited incomes will be eligible for this tax credit.

    For Representative Goode to claim this plan benefits the rich is an insult to Bangor residents who pay the state nearly $29 million in annual income tax. If you really look at how this plan works you will see it modernizes our tax code so the majority of Mainers are keeping what they earn.

    Don’t be fooled by rhetoric. I encourage you to attend one of our upcoming town hall meetings to learn the facts.

    You can also call your legislator to tell them you support eliminating the income tax. Legislators are working on the budget now and they must hear from you.

    Meanwhile, remember who introduced the income tax here in Maine? Well, today former Governor Ken Curtis lives in Florida where there is zero income tax.

    Thanks for listening.

—–

3/19/15 UPDATE: Bumping yesterday’s post to the top of the page, as Maine author and long-time Bangor resident Stephen King has responded to Governor LePage.

    king“Governor LePage is full of the stuff that makes the grass grow green. Tabby and I pay every cent of our Maine state income taxes, and are glad to do it. We feel, as Governor LePage apparently does not, that much is owed from those to whom much has been given. We see our taxes as a way of paying back the state that has given us so much. State taxes pay for state services. There’s just no way aRound it. Governor LePage needs to remember there ain’t no free lunch.”

—–

(Originally posted 3/18/15)

Interesting lil weekly address here today by Maine Governor Paul LePage (emphasis mine):

Eliminating the Income Tax Means a Pay Raise for Hardworking Mainers

    Eliminating the Income Tax Means a Pay Raise for Hardworking Mainers

    Forty-six years ago Democratic Governor Ken Curtis championed a controversial state income tax. So it began; Mainer’s paychecks were raided to pay for bigger government.

    Hello, this is Governor Paul LePage.

    In 1969, the income tax barely survived the Legislature, and today $1.2 billion dollars is taken from hardworking Mainers through income tax.

    Nearly fifty years later, we are trying to return money back to Mainers, but it’s not without a major battle.

    This week, Democratic Representative Adam Goode of Bangor opposed our plan saying it only benefits the rich.

    Governor LePage speaks to audience at Auburn tax reform town hall.

    Governor LePage speaks to audience at Auburn tax reform town hall.

    However, his definition of rich is interesting. Most Maine businesses are pass through entities meaning many of those earning 400-thousand dollars are actually small businesses owners. These are the businesses that create jobs and invest these tax cuts creating career opportunities.

    Also, what Rep. Goode fails to mention is that 653-thousand working Mainers pay over one billion dollars – 1.2 billion to be exact – in income taxes.

    Our plan returns that money back to working Mainers. Starting next year, Mainers will receive $238 million annually back in taxes and that number increases to $300 million in four years
    .
    Our plan helps those earning lower incomes, too. We’ve set aside $60 Million to the neediest Mainers through the Sales Tax Fairness Credit and the Property Tax Fairness Credit. These tax credits are available only to those of more limited means.

    The Property Tax Fairness Credit will help Mainers with their property taxes. We’ve doubled the amount of money available to Mainers under 65 and with limited incomes.

    We have also tripled the amount of money available through the Homestead Exemption. This tax credit helps Mainers over 65 to lower their property taxes.

    Dozens attended LePage's 3/11/15 town hall held in Auburn to hear what the governor had to say about his budget and tax reform.

    Dozens attended LePage’s 3/11/15 town hall held in Auburn to hear what the governor had to say about his budget and tax reform.

    Another way we help folks with lower incomes is by providing a tax credit toward the sales tax. Those with limited incomes will be eligible for this tax credit.

    For Representative Goode to claim this plan benefits the rich is an insult to Bangor residents who pay the state nearly $29 million in annual income tax. If you really look at how this plan works you will see it modernizes our tax code so the majority of Mainers are keeping what they earn.

    Don’t be fooled by rhetoric. I encourage you to attend one of our upcoming town hall meetings to learn the facts.

    You can also call your legislator to tell them you support eliminating the income tax. Legislators are working on the budget now and they must hear from you.

    Meanwhile, remember who introduced the income tax here in Maine. Well, today former Governor Ken Curtis lives in Florida where there is zero income tax. Stephen King and Roxanne Quimby have moved away, as well.

    Thanks for listening.

Oopsie! Has the governor so soon forgotten his wife, First Lady Ann LePage is a snowbird, too?

Or that in 2010, Mrs. LePage had to pay a hefty fine to the State of Florida, for claiming permanent residency in both states?

Awkward…

(Cross posted at Daily Kos)

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Public Responds to LePage FY 2016-17 Biennial Budget (Day 1)

Posted on February 18, 2015. Filed under: Uncategorized | Tags: , , , , , , , , , , , , , , |

Governor LePage rolls out FY 2016-17 biennial budget proposal

Governor LePage rolls out FY 2016-17 biennial budget proposal

Back in January, Maine Governor Paul LePage and members of his administration presented the FY 2016-2017 biennial budget proposal to the state. Since then, various members of the administration have met with the 127th Legislature’s Appropriations and Financial Affairs standing committee (with other committees, as applicable) on multiple occasions, met with the public, and held numerous press conferences to sway not just members of the public but also their own party to support the proposals.

Now, it is the public’s turn to speak up. Maine House Democrats shared the following summarized testimony presented to the committee on Tuesday.

    Adam Lee, Lee Auto Malls: “The idea of lowering the tax rate for the wealthiest members of society is misguided…When my taxes are lowered it leaves less to be distributed to the municipalities. I get a tax cut and everyone else in town gets to chip in to pay for it through higher property taxes. Doesn’t sound fair? It isn’t…. My business depends on a strong middle class. I sell good old fashioned Dodges, GMC trucks, Nissans, and used cars, as well as other brands. A strong middle class is not helped by tax breaks for the rich. Competitive rates, and tax breaks for the middle class is much more useful. A skilled workforce is the one of the single largest factors determining where a business locates. Invest in education, training, our University and community College System.”

    Veteran and Nurse Richard Bissell of Bangor: “I’m here to oppose these drastic cuts proposed by the Governor for wealthy Mainers and corporations, especially when those cuts come at the expense of the middle class and poor Mainers…Property taxes are an impossible cost for many Mainers, from young couples and families that are in their first home up to seniors try to age in their homes.”

    Small Business Owner Carson Lynch of Gorham Grind: “This plan would cut taxes for the very wealthy while effectively raising taxes on the lower and middle income Mainers. Not only is this morally wrong, it will hurt Maine small businesses and ship money out of state….My small business runs on very small margins. I’m not a Starbucks or Dunkin Donuts. A change to Maine’s tax code could make or break my business.”

    Clam Digger Skip Worcester of Hermon: “I’m here today because I am deeply concerned with the Governor’s proposed cuts to income and corporate taxes in Maine…Corporations are making record profits in Maine but they are not paying their fair share in taxes – their taxes have been less and less and their profits have been higher and higher, it’s the reverse for us middle and lower classes. Our wages have stayed practically the same while the cost of living, heating and eating have gone up.”

Among others who spoke to the committee was Davida Ammerman of Madison, whose testimony is below.

    Representative Rotundo, Senator Hamper, Representative Goode, and Senator McCormick, thank you for having me here today to speak with you.

    I am here today to ask you to oppose the cuts to corporate and income tax in the Governor’s proposed budget. With this proposal, we will see the divisions increase between rural areas that are not so affluent and able to carry the cost, am\nd more affluent ones that will. In a town like Madison where I live, the option to tax non-profits is not a viable source of revenue, forcing the town to increase property taxes to continue being viable.

    Without a fair and balanced budget we will be forcing older people to lose their homes, and rural town are going to have a hard time keeping up with basic services like roads, law enforcement, and schools. Being on fixed income, it is hard to be able to conceive of paying more in sales and property taxes, and for the increase in services that I will need as I age. The Governor’s proposal puts revenue at recession era levels, and it doesn’t add up so that means we are going to see more cuts at the state level in future years. This creates a huge amount of uncertainty for us aging Mainers- we don’t know what we can count on. I don’t know that I will be able to keep my house, or if I will be able to pass it on to my children as planned.

    On the other end this is going to be very hard and discouraging for young people in Maine as well. Our daughter, a single mom just barely making ends meet, would have to sell her house that she has worked so hard to get if her property taxes go, if the Homestead Exemption is cut for Mainers under 65, and she loses the chance to deduct her mortgage payment. Young kids that are already fighting student loans and low wages will lose their chance to get ahead. So many kids are just getting by already- this is making the American Dream even more unattainable.

    If we are going to start taxing non-profits and cutting so many programs in the state budget, how is that going to affect funding homeless shelters and other organizations providing services for people who are just barely getting by and depending on these services for life support?

    I hate to see the American Dream being put out of reach for so many of the population.

    Thank You.

Quinn Gormley of Portland was kind enough to share her prepared testimony as well:

    My name is Quinn Gormley. I’m currently an undergraduate student at the University of Southern Maine in Portland, but I grew up in Damariscotta, where my father, a bus driver, and my mother, the director of our local library, still live and work today.

    For most of my life, my family has proudly belonged to the working class in this state. Growing up, my parents taught me the value of a hard day’s work, as my mother pulled sixty or more hour weeks, often with little to no pay, to keep the doors of the library open, and as my dad, who for my entire life has had to balance three different jobs just to help us make ends meet, waking up at 5 in the morning to drive a school bus, and often working late into the evening to get everything done.

    During the recession we were lucky. A school always needs bus drivers, and the library is valued by our community, so my parents managed to keep their jobs. Many in our town were not so lucky. And I so, as I read the details of this new budget, I am concerned. I am concerned that this budget is shifting the burden onto Middle Class families and families like my own are not going to be able to afford it.

    As a student who is used to examining things critically, when I look at this budget, I see the governor’s tax cuts as forced false choices that prioritize income and estate tax cuts for Maine’s wealthiest individuals and large corporations at the expense of property tax relief for families like my own.

    Every dollar in tax cuts is a dollar that will have to be made up for with spending cuts. It just doesn’t make sense to prioritize tax cuts that disproportionately benefit the wealthy and large corporations and leave the school bus drivers and librarians to fend for their own.

    As I navigate college with the hope to stay in Maine once I graduate, this budget does not seem to pave the way for a state with increased job growth, in contrast, states that have pursued this path in recent years have actually seen worse, not better, economic performance than neighboring states. They’ve had to cut state investments in education, and workforce training. I want to stay, work, and live in Maine but when my state pushes policies that hurt education, job training, and the middle class, I doubt that I can.

    This budget is the wrong path for Maine. It benefits a small percentage of Mainer’s, and the costs will be passed onto those hard working Mainers who are just trying to make it work. And so, I urge you; please oppose the cuts to corporate and income tax in this proposed budget. Thank you for your attention and all you do.

Democrats on the AFA committee later released their own statements:

    Rep. Peggy Rotundo, the House Chair of the Appropriations Committee: “We haven’t been getting the the full story about Governor LePage’s budget. I’m deeply concerned that the ratcheting down of state revenues in the out years will mean fewer dollars in the future for workforce development, education, and many of the very things businesses and workers say we need to succeed. We want a tax reform plan that is paid for now and in the future so we don’t jeopardize our support for Maine families, our schools, or workforce, or for our local firefighters and police.”

    Senator Linda Valentino (Saco): “I support tax reform but this budget sidelines Maine families at the expense of the wealthy and big corporations. We heard a lot of concerns from people today about the elimination of the mortgage interest deduction, the Homestead exemption, and the property tax deduction. If these deductions are eliminated, it will jeopardize Maine’s economic recovery.”

Maine Center for Economic Policy released the following reactions to the budget proposal and information. MECEP economist Joel Johnson’s full testimony can be found here. But these portions jump out:

MECEP economist Joel Johnson speaks before joint AFA, Taxation committees

MECEP economist Joel Johnson speaks before joint AFA, Taxation committees

    The combined fiscal impact of these tax cuts in FY 2019 is about $677 million per year, according to Maine Revenue Services. That’s a tax cut equal to 19% of General Fund revenue forecast for that year. The sales tax increases in the Governor’s budget don’t cover the cost of that tax cut, and as a result, the state must cut spending by $266 million in FY 2019. That spending cut will grow into subsequent fiscal years as the corporate income tax cut fully phases in.

    Approximately $167 million of the governor’s proposed spending cuts will come in the form of the elimination of revenue sharing to towns and cities. Faced with a loss of revenue sharing and struggling to meet obligations to fund K-12 education, state and local governments will have to raise taxes and/or cut spending. That means higher taxes and/or fewer services like snowplowing, public safety, road maintenance, libraries, and parks. The governor’s proposal saves an additional $12 million by eliminating the homestead exemption for most Mainers.

    The governor’s proposal fails to specify the remaining $90 million in state spending cuts it encompasses. In fact, the Governor’s budget only specifies a two-year spending plan while proposing tax cuts that span multiple budget periods. The income and estate tax cuts proposed in the Governor’s budget, combined with revamped arbitrary limits on state appropriation growth, will prevent the state from reaching the statutorily-mandated goal of funding 55% of the cost of K-12 education in the state any time in the near future. Yet the Governor’s budget proposal includes a target of 55% for Fiscal Year 2017 and beyond. That is not a credible, achievable objective given the income and estate tax cuts included in a different section of the same budget proposal.

Other points raised by MECEP for consideration:

    1. The governor’s tax cuts aren’t paid for and are fiscally irresponsible. They set Maine up for future fiscal crises, which will lead to deep cuts to education, health care, job training, and other foundational components of a strong, sustainable economy.

    • By fiscal year 2019, the governor’s plan cuts income, estate, and corporate taxes by $690 million and raises sales and use taxes by $424 million. That leaves a shortfall of $266 million. The governor proposes to make up this shortfall, in part, by eliminating $167 million in state aid to towns for local public services. Legislators will have to make up the remaining balance by additional spending cuts beyond those that have been enacted over recent years.
    • The governor’s plan locks in recession-era levels of revenue putting state spending as a share of the economy at historic lows. That means state funding for education, health care, and other services will continue to fall behind even as the economy recovers. It also means that Maine will have virtually no capacity to absorb unanticipated future expenses or to maintain critical public investments when the next economic downturn occurs.

    2. The governor’s tax cuts force false choices and prioritize income and estate tax cuts for Maine’s wealthiest individuals and large corporations at the expense of property tax relief for middle-class Mainers.

    • Every dollar in tax cuts is a dollar that legislators will have to make up by either raising other taxes or with cuts in spending for education and other services. At a time when the state is already failing to fulfill its commitments to Maine’s students and communities it doesn’t make sense to place a higher priority on tax cuts that disproportionately benefit the wealthy and large corporations. For example, eliminating the estate tax will cost over $37 million by fiscal year 2019 and benefit approximately 150 of the wealthiest estates. This potentially comes at the expense of making progress in funding K-12 education, supporting prescription drug assistance to low-income seniors, maintaining cost-effective health care prevention programs, or providing college scholarships to Maine’s future workers.
    • Part of the governor’s plan includes eliminating the Homestead Exemption for Maine residents under age 65 which is equivalent to raising property taxes between $120 and $160 for hundreds of thousands of Maine families. Additional property tax increases are likely for middle-class Mainers as communities are forced to pick up more of the costs of K-12 education, public safety, and road maintenance as called for in the governor’s budget.
    • While we don’t oppose cutting taxes, we believe it can be done in a way that doesn’t force false choices and that distributes the benefits more evenly across all income groups. Because this plan doesn’t maximize opportunities to export taxes to out-of-state visitors and part-year residents and places higher priority on tax cuts that deliver the greatest benefits to wealthy individuals and large corporations, it falls short in terms of securing adequate revenue and in improving the overall fairness of Maine’s tax system.

    3. The governor’s tax plan is a failed prescription for growing Maine’s economy.

    Note: As there will be weeks of hearings and work on the budget proposal, this will be part of a series of posts. This week’s testimonies will be broken up into daily installments of the highlights.

    ———

    RELATED:

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  • Sifting Through The LePage FY 2016/2017 Proposed Budget: LePage, MDOT Roll Out Over $430 Million In Projects
  • Sifting Through the LePage FY 2016/2017 Proposed Budget: DACF Meets With AFA, AG Committees
  • Sifting Through The LePage FY 2016/2017 Proposed Budget: DHHS Meets With AFA, HHS.
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