November 24, 2024
Column

Maine taxes rise with myths

As we watch the Solons of Augusta prepare to do battle over the budget, it should give us concern that defenders of Maine’s astonishingly high taxes are out already, softening the ground for yet more “adjustments” to the state’s unbearable level of taxes. If Rep. Ted Koffman’s Jan. 26 Op-ed piece in the NEWS is any indication, they intend to work hard over the coming weeks not only defending the Maine’s high taxes and dreaming up new ways to raise them (local option, for example), but perpetuating a series of myths about them. High taxes, we are told, are our destiny by virtue of economics and geography. But are they?

Myth 1 That Maine doesn’t really have the highest combined state and local taxes in America. Despite Koffman’s questionable assertion that our low per capita income only makes our taxes feel higher, as though they were wind chill or something, the fact remains that Mainers spend a higher percentage of the money they earn paying state and local taxes than citizens of any other state. The Washington-based Tax Foundation found that Mainers pay a towering 13.6 percent of their income in state and local taxes, nearly an entire percentage point above second-place New York at 12.9 percent. Third place Wisconsin falls another entire percentage point below that to 11.9 percent, meaning that Mainers pay nearly two percentage points more than residents of 48 other states. What does this mean in real-life terms? The U.S. Census bureau, in its Statistical Abstract of The United States 2001, reports that a family of four living in Portland and making $50,000 a year, pays $6,227 in state and local taxes, more than the same family would pay in any of the other 29 U.S. cities they surveyed. When income jumps to $75,000, the same family pays a whopping $10,319, over $2000 more than the same family would pay in Boston and a stunning $3300 more than the national average. That equates to $275 more a month that a Maine family is forced to pay. Koffman claims that the tax structure is at least fair, treating lower incomes more kindly. Really? The same family of four making only $25,000 still pays $2800, second only to citizens of Philadelphia and still $800 above the national average. Koffman is right that our taxes feel high – because they are. We simply pay more for the government services we receive than anyone else in the nation. But do our low incomes, as Koffman states, drive the high taxation? Not really.

Myth 2 That Maine has high taxes because it is poor. This argument is probably the one most commonly put forth by our friends in Augusta to defend their unquenchable thirst for our money, but it too is a myth. Koffman is right that we are ranked 37th in per capita income, but that means that there are 13 other states poorer than we are. By the logic of this argument they should have high taxes as well, right? Wrong. Not one of the states with lower per capita income than Maine pays more in state and local taxes than we do. According to the Census bureau, if our family of four making $50,000 were living in Phoenix, Arizona, the next state lower than us in income, they would pay only $3700 in taxes, almost half what the Portland family pays. They would pay $200 less than that if they lived in Albuquerque, New Mexico, the third poorest state. Citizens of the poorest state in nation, Mississippi, pay only 10.8 percent of their income in state and local taxes, nearly three percentage points lower than Maine. So if low incomes don’t explain our high taxes, what does? Geography? Nope.

Myth 3 That Maine has high taxes because it is big and sparsely populated. Only with the myopic vision of an Augusta lawmaker could you look at a map of the U.S. and conclude that Maine is a big state. Maine is, in fact, the 38th biggest state. Koffman insists that we have “far more miles of highway to construct and maintain,” but far more than whom? The Census reports that Maine has only 22,664 miles of roads. At little over 20,000 miles, though, little tiny Connecticut has nearly that much all by itself. Massachusetts has another 35,000 miles of roads of its own. Surely it costs Maine less to maintain its roads than it costs Massachusetts to take care of its. Yes, you’re saying, but Massachusetts has a higher population to spread the costs around, what about how sparse our population is? Well, you want a big state, sparsely populated? How about Idaho, which has a similar climate, and almost exactly our same population spread over a state nearly three times bigger. Idaho is also 41st in per capita income, poorer than we are, but according to the Tax Foundation, its citizens pay only 10.4 percent of their income in state and local taxes. But what about our remoteness, you say? We live a day’s drive from about 20 million people, so how remote can we be? That we’re perhaps not a tempting market for energy suppliers or for health insurance companies has more to do with politics and economics, which are variable, than geography, which is not.

The Biggest Myth of All. That Maine’s taxes are a product of anything other than politics. As the above evidence indicates, the old excuses don’t bear scrutiny. Levels of spending and taxation are decided by politicians and citizens, not by circumstance. Evidence can be found right here in Maine. Twelve years ago Maine’s state and local taxes were lower than the national average. They clearly didn’t need to be as high back then, so why are they the highest in the nation now? Further evidence that geography is not taxation destiny can be found in our nearest neighbor, New Hampshire. We gloated over their failed attempt to annex Portsmouth shipyard, but what was their motivation? A desperate attempt to escape the tentacles of our draconian tax code, a code that taxes the spouses of shipyard workers who neither live nor work here. But even in our victory who gets the last laugh? According to the Tax Foundation, Mainers will work the equivalent of two full weeks, 14 days, more than our New Hampshire brethren just to pay taxes. That’s two weeks of salary that cannot be saved or invested or used to send kids to college. Is it any wonder that the Small Business Survival Committee rated New Hampshire the 7th most business-friendly state and Maine the 48th?

Koffman opens his piece by claiming that taxes are “the price of civilization”. So it is up to you to decide whether you think paying more of your money in taxes than anyone else in the nation and having the state still fall short, still fail to make ends meet, seemingly unable and even unwilling to make the one investment, in the laptop plan, that could change all of it, whether still not having enough after demanding more than any other state government in the land, constitutes “civilized” governance.

Stephen Bowen lives in Rockport


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