A new PriceWaterhouseCoopers study of Maine’s tax conditions should both reassure lawmakers that they are moving in the right direction and inspire them to keep going. The study, commissioned by the Maine Business Association Roundtable, didn’t reveal much that was new, but it did confirm for the state that the general assumptions about its tax levels and the various plans to address the issue were correct, which should have some limited value. Two other areas it mentions are worth further exploration.

Mainers who have followed the Legislature for the last couple of years could say with the same level of detail as the report just where the state falls in its tax burdens. The report does a nice job of summarizing a situation that has been discussed in detail and provides a conclusion you might expect. None of the major three taxes – property, income, sales – is in especially good shape; property is the worst. That’s why the focus here has been on relieving the pressure from that tax first.

The consultants note that neither the governor’s tax plan, nor the Chamber of Commerce’s plan nor the Taxpayers Bill of Rights plan is comprehensive. Perhaps the amount of agonizing Maine has done in the last 18 months over tax reform led the outside observers to believe something larger was going on than property-tax relief. There hasn’t been and, unfortunately, there shouldn’t be.

The current property-tax debate and the hard work of the Legislature’s select tax committee is a training ground for future tax-reform efforts, but property-tax relief is all lawmakers can handle for now. If they can find success with that, lawmakers could move on to another tax; if they tried to do everything this time, failure and more debate without progress would be the likely result.

Two useful observations from the report:

The consultants found the application forms for the circuit breaker tax relief program long and complex, both for taxpayers and for the state officials who have to process them. For instance, the income levels measured in it are not the same as the income for tax purposes, so, the report observes, “Significant differences between taxable income and income as measured under the program include add-backs for refundable federal child credits, the federal earned income tax credit, inheritances, life insurance proceeds (in excess of $5,000), lawsuit awards, social security and disability payments, and ‘any other income.'”

With a tax program, fairness and simplicity are often at odds – in this case, it may be that Maine has leaned too far toward fairness and sacrificed simplicity.

Second, the governor’s proposal to amend the constitution to allow municipalities to tax land for primary residences at a rate below that of market value creates challenges, according to the report. “The tax could result in a reduction in use of property for vacation use and accelerate the development of undeveloped land,” it concludes. The select tax committee has modified the governor’s initial proposal in several ways – for instance, by more specifically emphasizing particular land uses, but the observation should be considered by lawmakers as they vote.

Other states may attempt tax reform on a more comprehensive scale, but Maine will be fortunate if it can transform its property-tax relief plan from a bill to a badly needed law.