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Letter


Reduce the Income Tax and Provide Real Relief to Maine Families!
An Open Letter to the Maine House:

April 5, 2012
By Brent Mead


Dear Representative:

On behalf of the National Taxpayers Union’s 2,000 members in Maine, I urge you to support the Senate-passed LD 849. This bill has the potential to deliver substantial income tax relief for nearly all Mainers and would do so in a fiscally responsible manner.

As amended, LD 849 gradually reduces and consolidates Maine’s income tax structure, with the goal of flattening the rate to 4 percent. The bill operates under the simple assumption that a portion of excess revenue collected by the state should be returned to the taxpayers. It implements this principle by redirecting up to 20 percent of any budget surplus towards a new tax relief fund. Over time, monies held by this fund would be used to “buy down” top marginal income tax rates to the point where the state could have a single rate. This allows leaders to plan for future tax reductions while maintaining adequate reserves.

Currently, Maine languishes under one of the most oppressive tax regimes in the country. The average resident pays just over 10 percent of their income in state and local taxes, the 9th-highest such burden in the nation. Furthermore, the state’s tax policy has a real effect on economic growth, or lack thereof. According to the American Legislative Exchange Council, from 1999-2009, neighboring New Hampshire, which levies no personal income tax, experienced cumulative non-farm payroll growth of 1.7 percent. Meanwhile, Maine saw payroll contraction – a negative rate of 0.7 percent. LD 849 offers the prospect of improving this inhospitable climate.

Moreover, concerns that reducing income taxes will “break the budget” are unfounded and misguided. The truth is that states without income taxes have outpaced the rest of the pack not only in economic expansion, but in revenue growth as well. From 1999-2009, non-income-tax states recorded a 123.66 percent increase in collections compared to the national average of 70.23 percent. When combined with ongoing expenditure restraint, this kind of strong performance is a recipe for consistently stable and balanced budgets.

Reducing income tax burdens will give Maine the chance to become a regional leader on forward-looking economic policy. We urge you to support this important reform and reduce tax burdens on hard-working Maine families.

Sincerely,                                       
Brent Mead
State Government Affairs Manager