TAX AND TALK PLAN

A proposal to significantly alter the state’s tax system by broadening the sales tax and simplifying the income tax is likely to be quickly picked apart by lawmakers and lobbyists. That is unfortunate.

The concept plan, offered by the chairmen of the Legislature’s Taxation Committee, is a good “proposal for discussion,” as its authors, Sen. Joe Perry of Bangor and Rep. Richard Woodbury of Yarmouth, have called it. That discussion begins today in the Taxation Committee. However, the lawmakers offered specific proposals such as dropping the state’s sales tax from 5 to 4 percent while eliminating the exemption from numerous items from groceries to ski lift tickets. It would also change the state’s income tax to a flat 6 percent levy while raising the level at which families begin to be taxed to minimize the impact on low-income households.

Such ideas have been brought up numerous times before and quickly shot down. That’s why before debate begins on the specifics of this plan, lawmakers need to back up and consider what Maine wants to achieve through its tax system. It is meaningless to say that taxes should be lower, as many lawmakers have adopted as their mantra. Instead, lawmakers should set as their goal creating a system that is progressive and stable, encourages business development, encourages young people to stay here and retirees to move here and supports, to the extent practical, the New England tradition of local government.

Is it possible to craft a system that does all these things and lowers the tax rate? Quite possibly. That’s where the national experts the committee chairmen want to consult come in. They may be able to explain why taxing groceries and fuel adds stability to a tax base (these items must be purchased no matter how good or bad the economy) even though this may make a system more regressive. What’s more, they may offer good ways to minimize the regressivity by making changes elsewhere in the tax system, something Sen. Perry and Rep. Woodbury have tried to do in their proposal. Maybe other states have already come up with a model Maine can borrow from.

For decades, task forces, commissions and committees have offered suggestions for reforming Maine’s tax system. Most have been shelved. To get out of this cycle, Chairmen Perry and Woodbury have the unenviable task of helping their colleagues and constituents understand that changes, some of them unpopular, are necessary if Maine wants to lower its tax burden.

The best way to do this is to first offer a succinct goal. Then lawmakers, with help from outside experts, can begin talking about ways to achieve that goal. Otherwise, the state will witness yet another fight over whether taxing ski-lift tickets ruins the state economy.