TAX-CUT ALTERNATIVE

The Maine Chamber of Commerce promised a month or so ago to provide an alternative to the Palesky tax cap, allowing voters to reject the heavy-handed swipe at municipal governments while having reason to believe a better option was likely. Last week, chamber President Dana Connors delivered a serious alternative.

The standard for a plan to defeat the tax cap is that it would appeal to the majority of voters, would win if not the support at least the quiet acceptance of groups such as the Maine Municipal Association and would attract a bipartisan majority of lawmakers. It will do some of those immediately and could do all ultimately.

The state’s leading business organization made two advances on an alternative. First, it recognized the tax cap for what it is: “The Palesky proposal is a chaotic and confusing measure that targets the issue of high property taxes without addressing the underlying cause – too much spending,” a new chamber white paper concludes. “Palesky is admittedly imperfect; even its proponents acknowledge that some of the provisions of the legislation may be unconstitutional and certain aspects of the legislation will need to be changed if approved by Maine voters.”

Why Palesky supporters would back a measure they admit to being faulty to the point of being unconstitutional is not complicated: The desire for a tax cut outweighs their consideration of what the cut would mean. In response, is the chamber’s second response, a counterproposal. It lacks the simplicity of the single machete swipe of the 1 percent cut and does not provide the instant gratification of the Palesky plan, but unlike what voters will see on the ballot in November, it represents a good start on a tax overhaul.

To say it is a good start and not a finished plan is not to knock it. All proposals begin this way. The ones that survive intact do so only after extensive debate. This is time-consuming and occasionally frustrating, but it is certainly better than the way Palesky landed on Maine: as a 1970s-style California idea that took several tries at signature-gathering before its seemingly easy answer to the state’s woes – starving local governments – attracted enough people who perhaps just wanted to have the issue aired and settled.

The chamber’s plan would cap state and local spending to match the rise in personal income growth, and adjust those limits once Maine dropped to the middle of the state pack on tax burden. It would set aside state revenue surpluses for tax relief and limit property taxes to 6 percent of income. It would also tighten the state’s rules on reserve accounts.

The chamber will need to build support for these ideas as it addresses questions about them. Tax burden, for instance, is a comparison of tax levels to income; Maine incomes are actually in worse shape than its tax levels yet there is no direct attempt to raise wages. The 6 percent cap would be welcome by poor and middle-income residents struggling to pay property taxes. It would also be welcome by those with higher incomes looking to buy enormous houses – would the state really subsidize their taxes too?

These observations are hardly fatal to the chamber’s proposal. They are meant to provoke discussion about the best way to lower the tax burden sensibly and fairly. The chamber offers a strong foundation, and lawmakers should add their support as well as their ideas for building upon it.