THE 2 PERCENT REFORM

The tax reform the Legislature was going to consider last spring, then this summer, has now been pushed back to its winter session. Reform has been on the agenda every session for 20 years, and if it is being delayed again, you can assume that not only do the political parties disagree but that membership within the parties can’t come to agreement either.

This could continue for decades, with the evident problems in Maine’s tax system – heavy reliance on property taxes, a volatile sales tax, an outdated business tax, an income-tax system that puts modest incomes at the top rate – growing worse with time. Or the two political parties could do something miraculous this winter, the beginning of an election year: They could commit themselves to creating a new system based on adequate revenues in a more stable system that promotes fairness to taxpayers.

LD 1595 is the place to begin. The bill does some common sense things such as reconnect Maine to federal deductions, eliminate the “marriage penalty” and broaden the sales tax while lowering the rate. But Republicans aren’t eager to support the bill and neither are some Demo-crats, leaving its authors, Rep. Richard Woodbury of Yarmouth and Sen. Joseph Perry of Bangor, with more work do to.

One good suggestion being considered would move the bracket for the top income tax rate, which is 8.5 percent, from $17,000 for individuals to something much higher – perhaps in the $45,000-$50,000 range. That would at least make Maine’s income tax more honest: It is progressively graduated on paper but for a large number of residents it works essentially as a flat tax.

But even with the incremental progress on this legislation, it will fall into the same trap as countless other tax-reform bills unless it gets help -bipartisan help – from a new way of looking at Maine’s taxes.

That help comes from LD 1605, a bill sponsored by Sen. Ethan Strimling, a Democrat from Portland, and co-sponsored by Sen. Richard Rosen, a Republican from Bucksport. It would take Maine’s sales-tax system back to the beginning, wiping away exemptions, including for services and food, eliminating credits and refunds, but lowering the rate from 5 percent to 2 percent. Both senators say they realize such a sweeping change is too crude to deal with all the details that arise from sales taxes – its effect on the poor, for instance, and on manufacturing, where the lack of exemptions would cause the tax to pyramid.

Their bill accounts for some of that; they say they are willing to amend it to reflect other concerns. But if the Legislature wants a way to show a positive impact from reform, LD 1605 provides the force. And while it will, naturally, be kicked by every lobbyist in Augusta, so would the more modest plan Senate Democrats are now considering. At least LD 1605 lays the groundwork to show favoritism toward none and achieves stability while remaining revenue neutral.

Lawmakers can keep tinkering with reform while taxpayers fume, or they can take their good ideas on federal tax conformity and income-tax brackets, find a way to attach them to a really bold change in the sales tax and restart the debate in a substantial way. That’s a reform both parties should support.