For too long, Maine’s tax structure, a haphazard construction seemingly designed to chill the state’s economy, has been like that famous observation on the weather often attributed to Mark Twain. One of the more important outcomes of this legislative session would give the people of Maine the opportunity not only to talk about taxes in a comprehensive way, but also to do something about them.
This opportunity moved closer to reality this week with two encouraging “ought to pass” votes by the Taxation Committee. LD 2086 is a proposal with the overall goal of reducing the state’s reliance on the property tax for funding education. It aims to shift, in a revenue-neutral way, the burden from residential and business property to an expanded sales tax, a change that would help stabilize state revenue as it alleviates perhaps the greatest source of conflict between and within communities across the state. It would reduce the use of narrowly targeted and often-unproductive tax breaks for business and offer instead fairer taxation for all businesses and fairer treatment for towns that attract businesses. Disparities in education between rich and poor towns would be decreased, adequate funding of state education mandates will be required.
The companion bill, LD 2087, would make it possible. It proposes an amendment to the state constitution to authorize a property tax cap for education, six mills for primary properties and 12 for secondary. These bills are the products of recommendations made by the Education Funding Reform Committee, formed to address the state’s over-reliance on property taxes to fund education. That committee performed a great service by taking on this vexing issue. The Taxation Committee did likewise by turning those recommendations into legislation. It is worth noting that two committee members are opposed to the specifics of the bills, but voted to move them along in the belief that tax reform is an issue in desperate need of thorough debate.
Both of these bills will become law only if approved by voters at referendum in November. They will only go to referendum if the full Legislature puts them on the ballot. LD 2087, the constitutional amendment, requires a super-majority, two-thirds, of both the House and Senate. Opponents of the bills have presented all sorts of reasons for not liking them, most of which can be disregarded. One, however, cannot. Long before voters get a chance to decide this reform issue, they should be given a sense of where the new taxes in the proposal would fall. Under the upcoming demands from Augusta, the sales tax would have to collect approximately $230 million in new revenues annually.
Supporters have offered general possibilities of what might be taxed to raise these funds, but if towns are going to trust the state as never before to supply school funding, general possibilities are not enough. What new sales-tax source that does not fluctuate in good and bad times does the state intend to tap?
A recent poll commissioned by the Maine Municipal Association found 70 percent of Maine people support comprehensive tax reform. More than 60 percent still support it even if some taxes they pay will increase. Fully 80 percent said Maine needs “more courageous leadership” on tax reform. That’s incentive enough to pursue this reform and support enough to be forthright on where the new money would be found.
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