Mainers to Decide: Pay for Education Costs With Tax on Wealthy?

Oct 11, 2016

Next month’s ballot question that raises nearly $160 million for school funding in its first year is being touted by teachers, unions and several progressive groups.

Supporters of Question 2 say it allow the state to meet its obligations to pay for 55 percent of local education costs, by imposing a 3 percent tax surcharge on incomes over $200,000. Opponents say while they commend the goals, the funding scheme is off target.

For more than a decade, the state of Maine has been obligated to pick up at least 55 percent of all K-12 education costs. The Legislature and governor have repeatedly gotten around the mandate by incorporating the exemptive phrase “notwithstanding any other provision of law.”

The state came close to compliance in 2009, when it reached 53 percent of local school costs, but since then, the numbers have declined.

“Since 2011, we’ve really been around 47 or 48 percent each year, so we’re just not moving the dial in terms of providing more funding for our schools,” says John Kosinski, a lobbyist for the Maine Education Association who is leading the Stand Up For Students campaign that will appear as Question 2 on next month’s ballot.

Under the proposal, individuals with taxable income above $200,000 would be required to pay a 3 percent tax surcharge on their earnings. That money would be allocated to a special state fund created to provide what the ballot question describes as “direct support” for student learning in grades K-12.

Kosinski argues that wealthier Mainers have fared well under Gov. Paul LePage, at the expense of Maine schools.

“The top 1 and 2 percent of Mainers have gotten huge tax cuts, while politicians in Augusta and in our state have failed to properly fund our schools,” Kosinski says.

But opponents, such as Dana Connors, president of the Maine State Chamber of Commerce, say that taxing those with higher incomes in order to achieve the well-intentioned goal of increased school funding creates a false choice.

“We see its value when it comes to preparing our youth for today’s economy as well as tomorrow’s. We recognize the relationship it has to our economy,” he says. “We just do not believe that this is the right solution, nor the right way.”

“It’s taxing small business in Maine at a higher rate than it’s taxing large corporations,” says David Clough, the state director of the National Federation of Independent Business.

Clough says Question 2 would not only make Maine’s top tax rate the second highest in the nation, it would also fall disproportionately on small-business owners, who he says would see corporate income taxes jump from nearly 9 percent to more than 10 percent.

Clough and Connors agree that the proposal would discourage higher-paid professionals from considering Maine as a place to live and work. Opponents also say the plan is misleading, because 85 communities in Maine will receive no additional K-12 money, and because there is nothing in the law to guarantee that the money won’t be redirected for other uses.

Opponents also say it may well be unconstitutional, but Kosinski dismisses the criticisms.

“So this is just an example of the kind of tactics that are used to try and confuse voters,” Kosinski says. “Voters know. The top 1 and 2 percent of Mainers have gotten huge tax breaks and property taxpayers across this state are feeling that pinch.”

A recent poll by the Portland Press Herald-Maine Sunday Telegram showed that 60 percent of its respondents favor Question 2 as a way to increase state educational funding and hold down rising property taxes. But Geoff Herman of the Maine Municipal Association says his organization is not taking a position.

“The tax code needs to be modernized and adjusted in a comprehensive way,” he says. “What’s implemented by Question 2 is simply a focus on increasing the top marginal rate for certain taxpayers in the income tax side and ignoring the rest of the code.”

Another group, the Maine School Management Association, that generally supports increased educational funding measures, also elected to take no position on the question.