After Tax Talk, Action

Ten years of talking about reforming Maine’s taxes has been both fun and frustrating – all kinds of ideas have been suggested, with new ways of looking at revenue and levels of government examined and healthy debates over how broad a tax should be or how to force out-of-staters to pay more. What a stimulating discussion Maine has had, with the only confounding part being that for almost all of the last decade, no one in government thought the state’s tax system actually would be reformed.

Now, with a referendum scheduled on the issue and a governor who tends toward action over words, the situation is different and lawmakers will have to make decisions. Gov. John Baldacci is expected today to describe his version of reform. His plan will join a couple of legislative proposals, recommendations of a commission assembled by former House Speaker Michael Saxl, the referendum question originated by the Maine Municipal Association and a dozen reports from political left and right think tanks around Maine.

The governor says his goals are to reduce Maine’s tax burden while increasing its competitiveness. Perhaps it is implicit, but tax fairness should also be up with those two. Like several of the other plans, he properly wants to lower the tax burden – the amount of taxes people pay compared with their incomes – and reduce the budget’s mood swings of overcollecting during good times and undercollecting when the economy slows. Like the previous governor, he would encourage municipalities to cooperate more often and share services and he would set a more specific state share of education funding based on what are considered essential programs and services.

These are broad views that most lawmakers already accept as necessary. So too is his proposal to do away prospectively with the business-equipment tax and to promote his bond package as a means of investing in jobs and improving the economic climate. A much harder sell is his plan to eliminate the Homestead Exemption, which gives a property-tax break to all homeowners, and use the money to target larger exemptions for poorer property owners. Similarly, he will find opposition to trying to create efficiencies on the local level and will likely hear that plenty has already been done and that doing more is difficult.

Like his ambitious health plan, the governor’s reform relies on clear goals and a willingness to negotiate the finer points. Maine frittered away many opportunities in the late 1990s – when it had surplus revenues – to reform taxes because there remained a strong strain of denial about the adverse effects of the state’s tax system. Plenty of people wanted to pay lower taxes and recognized that Mainers, in the aggregate, were paying too much compared with those in other states. But that was just complaining, not a proposal for reform. The governor’s plan, which would stand as a counter proposal to the MMA ballot question, shows at least that the years of debate had the beneficial effect of highlighting identifiable problems, an important step forward.

And while its details are not yet fully known, the plan’s broad outline recognizes that the state and local governments must work together more often, just as towns can gain from working together. It also acknowledges that a serious attempt at lowering the tax burden means investing in jobs that pay better than the average wage in Maine. Most important, after years of talking about the problem, the governor’s commitment to taking action greatly increases the chance of reform occurring.