In pondering Maine tax relief, first, do no harm

Now that the election is over and the Taxpayer Bill of Rights has been defeated, legislators, the governor and special interest groups are rushing forward to offer their own versions of tax relief.

The governor’s tax relief message is particularly confusing. Maine voters were recently told by the administration that we should hike the meals and lodging tax. A few days later, the governor wanted to lower residential property taxes by capping residential property values and shifting the burden to nonresidents. And his recently released budget proposes raising the cigarette tax by a dollar.

The governor’s latest foray into tax relief comes on the heels of his previous term in which he raised many taxes, fees and assessments against the rhetoric of “no new broad-based taxes.”

Unfortunately, what is lacking in this important tax debate is a vision of what state leaders are trying to accomplish, and a plan to get there.

Before the folks in Augusta begin to tear apart the Maine Constitution, tax code and local government to find the Holy Grail, there are several things that must occur, or they could do irreversible damage.

First, we need a goal. Is the goal to lower the overall tax burden? If so, what should it be? Once the goal is established what time frame are we looking at to achieve the goal and what benchmarks are in place to measure success? These questions are almost impossible to answer without a widely understood and credible source to reference as a starting point in the debate and then use a reference for ongoing reporting for accountability.

The public, the media, governor’s office, think tanks and policy wonks need one widely accepted tax burden formula to begin the tax reform debate. Without it, the political posturing of politicians eager to make claims of “historic property tax relief” will go unchallenged and continue to cloud the debate, as well as force the public into the same vulnerable position of the recent past, such as: “Trust me, LD 1 is working.”

This entity exists. It is Legislature’s nonpartisan Office of Fiscal and Program Review. Each year, this respected group of professional analysts and accounting experts tracks and “number crunches” all changes to Maine’s tax burden. One project chronicles changes to your tax burden, up or down, based on actions by the Legislature and the governor.

They recently reported such an evaluation, titled “Maine’s Tax Burden: History and Projections” March 2006. This report tracks the historical levels of tax burden as well as future projections. It shows, in painful detail, how your state and local taxes as a share of personal income have risen from 12.3 percent in 2002, to 13.1 percent today.

OFPR is a perfect fit to clear up the political fog that allows politicians to talk tough on taxes in an election year and, once elected, continue business as usual. In addition, OFPR offers the public a measure of independent accountability that has not existed in the past.

Once policy-makers agree on a goal and a time frame to achieve tax reduction, they could work with the Legislature’s fiscal office to present a spending and tax formula that gradually reduces the tax burden. This formula could then be the established benchmark for public accountability.

For example, a reasonable and achievable rate such as a four-year tax burden reduction plan that is the same as the tax burden increases since 2002. That would amount to a total reduction of $822 per capita.

Then, the Taxation and Appropriation committees could adopt a list of questions they would ask the fiscal office on every piece of legislation and every budget bill that comes before the Legislature. Some of those questions could be: How does this tax exemption or tax increase effect tax burden? If passed, how will this law fit in with the goal and accepted formula for reducing the tax burden on Maine people?

Every tax plan, tax shift, and tax increase or decrease would be measured against the grander goal of tax burden reduction and the established formula to achieve it. Gone would be the days of confusion and political grandstanding. Maine people, the press and the Legislature would finally have a reliable way to measure success, before they enter the ballot box.

Richard Nass, R-Acton, is the state senator for District 2. Randy Hotham, R-Dixfield, is the state representative for District 93.