To: Someone from away
From: A weary Maine taxpayer
Re: Paying your fair share
First, dear visitor, don’t take that subject line the wrong way. As one of the millions who annually migrate to this glorious state starting right about now, you remind us how lucky we Mainers are to call Vacationland our year-round home.
It’s just that for a long time, we’ve had a problem. And today at a State House press conference, 11 courageous Maine lawmakers – five Democrats, five Republicans and one very knowledgeable independent – will finally step up and lay it out in terms we can all understand:
We full-timers pay too much in state and local taxes to make this place the jewel that it is.
At the same time, you folks from away don’t pay enough.
And that needs to change.
“This is not a gouging exercise at all,” insisted state Sen. Richard Woodbury, the independent from Yarmouth who’s the architect of the “Gang of 11’s” proposed overhaul of Maine’s entire tax system.
Rather, Woodbury explained in an interview Tuesday, it’s a long-overdue effort to inject more fairness into a tax system that now has us year-rounders picking up the tab for all of you lobster lovers.
A little bit about Woodbury: He’s got a Ph.D. in economics from Harvard University and, as a visiting scholar with the Federal Reserve Bank of Boston’s New England Public Policy Center, authored a hefty report a few years ago entitled “The Struggle for Tax Reform in Maine, 2003-2009.”
In other words, the man knows taxes inside out and sideways. And the more he’s looked at Maine’s troubled system, the more Woodbury has concluded that we need more than occasional tweaks (like the recent reduction in the top state income-tax rate from 8.5 percent to 7.95 percent) to get our revenue house in order.
“This is a much bigger plan” than past attempts at tax reform, noted Woodbury. “There is much more exporting (of the state’s tax burden) in this plan, a much bigger share from non-residents.”
Meaning?
Well, the numbers are still being crunched.
But for starters, according to a month-old draft of the reform plan, Maine’s 5 percent sales tax (lower than that of 41 other states) would rise to 6 percent.
At the same time, a laundry list of sales-tax exemptions for all but health-care and educational purchases would be eliminated.
Beyond that, the lodging tax would go from 7 to 10 percent, the meals tax from 7 to 8 percent, the auto-rental tax from 10 to 15 percent, the cigarette tax from $2 to $3.50 per pack, and the excise tax on beer and wine (gulp) would double.
Wait! Before you cancel that summer trip, cherished tourist, do the math: If you spent, say, $125 on lodging, $200 on meals, $100 on souvenirs and $75 on a rental car in one fun-filled day here, the added tax burden on your $500 outlay would be . . . let’s see . . . just over $10.
Still coming? Thought so.
So what’s in this tax plan for us Mainers?
A lot.
To help offset the increased (and admittedly regressive) sales-tax burden, the state would give low- and middle-income Mainers a “sales tax fairness credit” of as much as $1,000 on their income tax bills.
Maine’s estate tax, long blamed for driving well-heeled retirees to other states, would vanish.
The corporate income tax? Down from 8.93 percent to 7.5 percent.
And here’s the real whopper: Maine’s top personal income-tax rate would plummet from 7.95 percent all the way to a flat 4 percent.
You read that right. This plan cuts a year-round Mainer’s state income tax by virtually half — a home-grown economic stimulus package if ever there was one.
And lest we forget, there’s the property-tax reset: All Maine residents would get a $50,000 homestead exemption, netting as much as $1,000 per household in communities with sky-high property-tax rates. In addition, the truly needy would qualify for a “property tax fairness credit” of as much as $1,000.
(Hear that, Florida snowbirds? Re-establish your legal residency in Maine, and your property tax bill would go down.)
Now, even a casual observer of Maine politics knows that these days, a well-orchestrated press conference does not a tax revolution make.
Still, today’s rollout feels different from Maine’s past attempts at tax reform — and not just because Woodbury, its primary catalyst, knows more about this stuff than anyone under the State House dome.
This time, we’ve got a governor whose own budget proposal — according to lawmakers on both sides of the aisle — has about as much chance of survival as a French fry surrounded by a flock of seagulls.
We’ve got a bipartisan Gang of 11 vowing to stand behind this plan come hell or high water because, for all their political differences, they agree it’s simply the right thing to do.
And if we’re lucky, we’ll even have a citizenry smart enough to ignore the lobbyists howling — and they will howl — that this package portends the death of Maine’s tourism industry.
Which brings us back to you folks from away.
As you book your reservations online and scan the Internet for the latest in manly Speedo wear, my bet is that all this tax talk matters a lot more to us than it does to you.
My bet is that you’d never (evah!) turn your back on Vacationland over ten bucks a day — and the reason why is as clear as that deep-water lake you’ve been dreaming about all winter.
Maine’s worth every penny.
Bill Nemitz can be contacted at 791-6323 or at:
bnemitz@pressherald.com
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