Plan to Eliminate Maine Income Tax Sparks Heated Debate in Augusta

May 6, 2015

AUGUSTA, Maine - Members of the Legislature’s Taxation Committee appear to be divided over Gov. Paul LePage’s proposal to abolish the state personal income tax through a constitutional amendment.

Committee members heard familiar arguments on both sides today as the issue when to public hearings.

Earlier this session, after hours of testimony on Gov. LePage’s proposed budget and its various tax cut proposals, the case for each side in the debate over the proposed constitutional amendment are familiar.

Supporters say the elimination of the income tax would improve Maine’s economy in the long run. "The proposal for the amendment is the most, perhaps radically good thing to encourage businesses to come and locate here," said Nicholas Bull, of Center Lovell. Supporters like Bull say that Maine's income tax is currently so high that it discourages investment in the state. A

And Carol Weston of Americans for Prosperity -Maine, a conservative group, says the issue is so important that Mainers should have the chance to weigh in at the ballot box. "The question is, 'Do you trust the people of Maine to make a decision about their very own constitution?' " Weston said.

But opponents say that it makes little sense to ask the voters to decide on the issue without a clear plan to replace the lost revenue with other sources. Joel Johnson is an economist with the Maine Center for Economic Policy, a progressive think tank.

"This math isn’t hard to do. We can do it on the back of an envelope and see just how reckless and irresponsible this proposal is - to try and halve the general fund without any plan to pay for it," Johnson said.

And Susan Leet, a retired teacher from Poland, pressed lawmakers on why they would try to second guess what the future needs of the state might be. "Why would we tie the hands of future legislatures by eliminating a possibility of funding for the state by eliminating the income tax?" Leet said. "It seems like we can’t predict what we will need in the future."

That concern was echoed by some Democrats on the committee, including Diane Russell of Portland, who questioned eliminating the income tax without a detailed plan for paying future bills. "Our entire budget is $6.2 billion;  you are cutting $1.8 billion out," Russell said. "How are we going to meet these other objectives if you are cutting this out?"

Democrats on the committee have supported the concept of lowering the income tax by expanding the sales tax to more goods and services. But they say eliminating the income tax completely would hurt a lot of Maine citizens.

Bangor Democrat Adam Goode, who co-chairs the committee, questioned LePage policy advisor Aaron Chadbourne on the added burden to lower-income residents. "Is it a concern of the governor’s office that the bottom 20 percent would see a tax increase of $89?," Goode asked. "It’s a concern for the governor of the state of Maine that the income tax is having a harmful effect on our people and our economy," Chadbourne replied.

The committee will consider the proposal at a work session next week, but a constitutional amendment needs a two-thirds vote of both the House and Senate to go to the voters for their approval. On the House side, where Democrats hold a majority, party leaders say there are few Democrats in support of the proposal.