Maine moving forward: tax reform

By Rep. Ed Mazurek | Jul 19, 2009

During my time as a legislator and local official, I have heard more than an earful about Maine’s tax structure. Being a taxpayer myself, I understand the frustration experienced by many Maine people. When I decided to run for the Legislature more than six years ago, my top priority was to bring tax reform about.

A tax reform plan has been tried every session for years. In the end, sometimes in the few remaining hours of the session, something always derailed the effort.

In June, the Maine Legislature passed a real tax reform package. The legislation was signed by Gov. Baldacci and has been touted by many. Now, through a people’s veto signature drive, some misinformed folks are attempting to squash it.

While other states are raising taxes to fill budget holes, Maine actually found a way to get more money in the pockets of its residents. After our tax reform bill passed, the fiscally conservative Wall Street Journal said that what Maine accomplished was a miracle. That’s something we should be proud of and excited about for the recognition it brings our state.

The tax reform plan would reduce the tax burden for Maine people by more than $57 million every year, in part by lowering the top income tax rate. By reducing the top income tax rate from 8.5 percent to 6.5 percent, Maine residents would see hundreds of extra dollars in their paychecks throughout the year. That is money you and your family could spend however you choose.

The plan would also lower the taxes and capital gains paid by Maine’s small businesses from 8.5 percent to 6.5 percent, which in turn would spur growth, hiring and jobs.

Most retirees would see benefits from this plan because their fixed income would be taxed at a lower rate, slowing the exit of people to states with lower income tax rates. Maine would go from having one of the highest income tax rates to the middle of the pack.

To pay for tax relief for Maine people, we would transfer some of the liability to nonresidents. By broadening the sales tax base and exporting some of the cost to visitors, who are already getting a good deal, we can bring our own burden down. A small increase in the meals and lodging tax, along with adding a sales tax to some recreational and discretionary items will be a way to send more tax burden out of state.

By having a narrow sales tax base, we are relying on very few items to maintain state revenue. We rely largely on the purchase of cars and building materials to sustain us. That may work somewhat when the economy is strong, but when times are tough, the first things to drop off are new car sales and new construction projects – meaning that just when Mainers need the most help, the state is least equipped to provide it.

By choosing to add a sales tax to things paid for in large part by nonresidents, we can fund this tax reform plan. For the vast majority of Maine families and small businesses, even after paying sales tax on these few items they will still have hundreds of extra dollars in their pocket each year.

With all of these changes, Maine’s tax code finally reflects the 21st century economy.

I am thrilled to be a part of the process to bring real and meaningful tax reform to our state. This is why I wanted to go to Augusta as your representative. In the end, the state of Maine and its residents will be better served with a modern tax structure and a lower tax burden.

Rep. Edward Mazurek, D-Rockland, is serving his third term representing Rockland and part of Owls Head.
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