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The 130e The Maine legislature’s record on tax fairness is mixed. In one of the most chaotic and turbulent sessions in recent memory, lawmakers were able to take a step forward to disrupt Maine’s tax code before running up against some hurdles and leaving other work to be accomplished next year.
The obvious successes are the closing of an inefficient and costly corporate tax loophole and the expansion of the Working Income Tax Credit (EITC). Closing the Foreign Derivative Intangible Income (FDII) deduction will save the state $ 8.6 million per year, making the tax code fairer and freeing up funds for programs that help Mainers in need rather than multinational corporations. This happened relatively early in the session with the adoption of the first additional budget package. The EITC is working in the opposite direction, targeting funds to the people who need them most. Including this expansion in the most recent supplementary budget means 100,000 households will get more resources to help them make ends meet.
The biggest disappointment is the failure of the legislature to pass bills – including one that would have used the revenue increase to further stimulate the EITC – that would reduce the amount of the inheritance tax exclusion. and raise the taxes of the richest people by creating a new upper tax bracket. These bills received positive votes in committee but did not reach the governor’s office; a frequent argument against them was projections of increased revenues and plentiful federal funds. With this influx of revenue, the state has been able to fund important and impactful programs, but the longevity of these commitments may be linked to the appetite for significant tax fairness measures in future sessions.
Strong public support for tax fairness
Victories do not always mean that politics make law of them. Two additional signs of support for tax fairness are the number of progressive revenue proposals submitted by a wide range of lawmakers and the growing engagement of various voices who have spoken in favor of their adoption. More than a dozen members of the Maine House of Representatives have introduced bills that would have closed loopholes, changed rates and brackets, or worked in other ways to tip the economic balance in favor of ordinary Mainers instead of wealthy individuals and big corporations. Sponsors included speaker Ryan Fecteau, who submitted an invoice create a risk premium for front-line workers funded by the creation of a new tax bracket targeting family incomes above $ 500,000. And Deputy Majority Leader Rachel Talbot Ross submitted an invoice this would reduce the amount of property tax exclusion, bringing it back to pre-2010 levels and using that money to build affordable housing.
While not all of these bills have become law, they highlight concrete opportunities to address unmet Mainers’ needs as well as the in-principle endorsement of tax fairness, inspiring broad and deep public engagement. This year, the Taxation Committee heard workers, immigrants, environmentalists, small business owners, teachers, health care providers, and organizations that defend women, olderMainers, and people in need of addiction or mental health services. They even heard rich people who would pay more talk about why tax fairness is important to our state and our democracy. Many of these groups who testified also came together at this session to form Mainers for Tax Fairness, a new coalition of which MECEP is a founding member. The mission of Mainers for Tax Fairness is to bring a wide variety of voices in the fight for tax fairness, rooted in the idea that people and communities do better when everyone has the resources they need to thrive and prosper.
More to do
A number of bills that could have a significant impact on Maine’s tax code have been postponed until next year and will likely be considered by the tax commission in January. These include “LD 428, a law aimed at preventing the abuse of tax havens” which has the potential to close another costly and fundamentally unfair loophole used by multinational corporations to avoid paying taxes in Maine. Another is “LD 1129, a law relating to the evaluation of retail facilities”. Better known as the Dark Store Bill, this bill would end a manipulative legal tactic that allows big box stores to avoid paying their fair share of local property taxes. Passing these bills would lessen the power of big corporations who rig the tax code in their favor and let everyone pay for it.
This post originally appeared on mecep.org and is republished here with permission from the Maine Center for Economic Policy.
Photo: Maine State House. | tag
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