DOOM, GLOOM AND TAXES

Does repeating something often enough make it true? That’s what some business lobbyists and conservative activists seem to be trying with their repeated assertions about the state’s bad business climate.

Days after the Legislature adjourned, these groups complained that lawmakers had made a bad business climate worse. The biggest target for their ire was an increase in the per gallon tax on beer, wine and soda and a tax on insurance claims to help pay for the state’s Dirigo Health program. The taxes were not the best way to pay for the insurance and health care improvement program, but letting it run out of money would not have helped small businesses, which find it increasingly difficult to pay for insurance for their employees, either.

The Alliance for Maine’s Future, a business-backed group that leans Republican, is pushing a people’s veto to repeal these tax increases.

Groups like the alliance are right that Maine’s tax burden is too high, but they must be more realistic about why that is the case. In 2005, Maine’s state and local tax burden, as a percentage of income, was 13.2 percent, ranking Maine fourth in the nation, according to U.S. Census figures (the State Planning Office says it has dropped to about 11 percent). Take out income, which in Maine is below the national average and falling by comparison, and the tax rate is still too high, but not in the top 10 nationally.

An obvious problem is that Maine’s incomes are too low, prompting the Maine Development Foundation to give the state a red flag in this area in its most recent report. “Increasing personal income is fundamental to a high quality of life for Maine’s citizens and is a reflection of economic growth and prosperity,” the foundation wrote. In the legislative session that ended earlier this month, the Maine State Chamber of Commerce and other business interests opposed an increase in the state’s minimum wage arguing it would “make our state less competitive for jobs and opportunities for our citizens.” The measure, which increases the minimum wage by 50 cents over two years, was passed.

As for taxes, the sales tax was lowered from 6 percent to 5 percent in 2000, saving Mainers $130 million a year. A year later, the snack tax was eliminated, reducing taxes by about $15 million a year. For homeowners, the homestead exemption and the circuit breaker have been increased, reducing property taxes.

For businesses, the personal property tax on business equipment has been permanently eliminated, while the reimbursements under BETR have grown from $6 million in 2006 to $68 million in the current year. Businesses in Pine Tree Zones pay no corporate income taxes for the first five years and no sales tax on most purchases for 10 years. Numerous targeted tax exemptions have also been enacted.

Billed as a way to decrease property taxes, state funding for kindergarten through 12th-grade education has been increased by more than $800 million since 2003. Still, 82 percent of school units exceeded their spending caps last year, according to the State Planning Office.

Gov. John Baldacci proposed, and most lawmakers supported, school consolidation as a way to reduce education spending. This effort wasn’t exactly enthusiastically supported by the business community or so-called fiscal conservatives.

There is certainly more the state can do to improve Maine’s business climate – redoubling efforts to reduce energy prices, for example – but constantly complaining about taxes isn’t among them.