I’d like to comment on a letter by Stan Davis of Wayne, “We need answers to two important budget questions,” in the newspaper on Feb. 5.
His first question asks, “Why should there be bigger tax cuts for the rich than for everyone else?” Answer, nobody gets a tax cut. Let’s just put dollars in place of his income tax rates, and for the sake of clarity we will just use three income classes, lower class, middle class and upper class.
Lower class: On income of $9,701 at 5.75 percent equals $557.81; on income of $50,000 at 5.75 percent equals $2,875; the average is $29,850 at 5.75 percent equals $1,716.40.
Middle class: On income of $50,001 at 6.5 percent equals $3,250; on income of $175,000 at 6.5 percent equals $11,375; the average is $112,500.50 at 6.5 percent equals $7,312.50.
Upper class: On income of $175,001 at 5.75 percent equals $10,062.56; on income of $1,000,000 at 5.75 percent equals $57,500; the average is $587,500.50 at 5.75 percent equals $33,781.28.
From these numbers, it’s easy to see that it’s the middle class taxpayer who is getting the higher tax burden of 6.5 percent and the lower class and upper class at 5.75 percent. The upper class, however, is putting the most dollars into state coffer.
Davis’ second question is, “Which services will be cut if we cut taxes?” Answer, there is no tax cut. Lower income taxes for the income earners is just passed on to the folks who do not pay income taxes, in the form of higher sales taxes on purchases. This tax burden will greatly affect the people who can least afford sales taxes: the poor and the elderly on fixed income.
I think the tax plan proposal by Gov. Paul LePage needs a lot more work.
Sheldon Goodine
South China
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