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Tax reform? I have a vague memory that it used to be the most important issue in the history of the state. But I can’t recall why, because that was way back in the distant past, like last month.
Fortunately, there’s no need to assemble volunteers to search my memory. According to Governor John Baldacci, it’s all been taken care of. In Baldacci’s State of the State speech on January 25, he said, "Our state tax burden has fallen from eighth to 13th in the country . . . we’ve made real progress."
If my brain weren’t so cluttered with parody Christmas carols from The Simpsons and statistics from the Sports Illustrated swimsuit issue, I’d probably be able to recollect when it was that Maine’s tax burden declined from second in the nation, which is where the Tax Foundation still lists it, to eighth, as the governor claims. If I’d paid more attention to something besides beer prices at happy hour, I might be able to dredge up the details of whatever plan instantly reduced us all the way to 13th.
What comes to mind — vaguely — is property-tax legislation the Legislature passed in January. In his speech, Baldacci said that measure would result in average savings for Maine homeowners of $207 next year. (How do you suppose they got it to come out exactly the same as the state’s area code?)
If my memory serves (service that wouldn’t merit much of a tip), a big chunk of that tax cut comes from expanding the Homestead Exemption, the portion of a home’s value on which no property taxes are assessed, from $7000 to $13,000. The governor may have had a senior moment, because he neglected to mention only half that increase is being covered by a state reimbursement to municipalities for the lost revenue. The rest — $3000 for every primary dwelling — has to be made up by cities and towns. If your local government decides to do that by raising taxes, your average savings may be somewhat below average.
Oh wait, I just remembered about spending caps. Baldacci’s legislation requires every level of government to abide by limits on how much budgets can increase each year. That reform might result in significant savings to taxpayers over time. At least to those taxpayers who have most of their life expectancy left.
Although maybe not, because the caps can be overridden by, among other things, a majority vote of the local town council, a majority vote of the Legislature, a stiff breeze, or persistent whining by an undernourished poodle. If my head were a little clearer, I might be able to explain how allowing the cap to be shattered so easily is different from the system we had before, in which simple majorities (some simpler than others) could approve any amounts of spending they saw fit.
In his State of the State address, the governor didn’t make any further mention of tax reform. Given all the new spending programs he had to talk about (improving cell-phone reception, providing cheap solar-power systems, building biomedical research facilities to find a cure for amnesia) it probably slipped his mind that there are still a few unresolved issues. Such as:
Property-tax bills will continue to be too high because that levy is being used to pay for lots of things that have nothing to do with owning property, such as county government and social services. Those items ought to be funded by broad-based taxes. Speaking of which:
Our broad-based taxes are screwy. The sales tax is narrower than in any other state, exempting recreation, professional services, and other categories worth hundreds of millions of dollars. That makes it overly dependent on purchases of cars and home-improvement products. Whenever there’s a recession, consumers stop buying that stuff, and the state has a budget crisis. The income tax hits middle-income taxpayers with one of the highest rates in the country on most of their earnings. The excise tax is driving people to illegally register their cars in New Hampshire.
In spite of these petty concerns, legislative leaders seem to have only the fuzziest perception of the problem. "The Legislature has delivered on the promise of immediate and direct tax relief," House Speaker John Richardson wrote in a January 22 op-ed piece in the Bangor Daily News. "I was glad to see my Democratic colleagues take up not just some of the issues, but all of the issues the people of Maine expected action on."
"I believe we have to let [the new law] take hold and get some credibility with the people," state Senator Joe Perry of Bangor told the Portland Press Herald in explaining why he, as co-chair of the Taxation Committee, wouldn’t be pushing additional changes this session.
"The governor has recognized there needs to be further tax reform," said Baldacci’s spokesman, Lee Umphrey, in a Lewiston Sun Journal article. But doing anything right away would be "too much."
I’m sure there’s a good reason for delaying action on a problem that’s been growing worse for three decades.
I just can’t remember what it is.
Don’t forget to email me at email@example.comThe Politics and Other Mistakes archive.
Issue Date: February 4 - 10, 2005
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