As our legislators consider Governor LePage’s unpaid for $1.7 billion proposal to abolish the income tax, please consider this cautionary tale from Kansas in today’s Portland Press Herald:

“Income tax cuts in Kansas championed by Gov. Sam Brownback have led to credit downgrades, political turmoil and deepening budget deficits. This week, they’ll start forcing schools to close early. As lawmakers work to erase a projected $800 million budget gap for the fiscal year starting July 1, at least eight school districts that saw their funding cut this year because of a greater-than-projected slide in state tax collections will begin shutting down before the scheduled end of classes. Dozens of others have eliminated or cut programs.”  [PPH (Tribune News Service), 5/6 ]

Governor LePage and Republican allies are proposing to eliminate the income tax and just like Kansas they have not offered a plan to pay for it.

During a public hearing on the bill yesterday experts and advocates warned Maine would be forced to cut investment in education, which is vital for the state’s economic growth.

“State spending for public schools is now $944 million, about 30 percent of the state budget. ‘You could zero-out education funding, every penny, and it still would only solve half of the (revenue) problem’ if the income tax is eliminated, John Kosinski, representing the Maine Education Association.” [PPH, 5/5]

Maine spends close to $1.2 billion on K-12 and higher education and $750 million on health care for children, seniors, and people with disabilities.  Even if the governor cut all state funding for education and half the funding for health care, there still wouldn’t be enough money to cover the cost of eliminating Maine’s income tax.

According to an analysis from the Maine Center for Economic analysis, the top 1 percent of Mainers – 7,000 households with incomes greater than $392,000 – will get a $61,000 income tax cut on average and account for 26 percent of the total amount. Meanwhile, middle-income Mainers – 140,000 households with incomes between $38,000 and $60,000 – will get a $900 income tax cut on average and account for less than 8 percent of the total, while property taxes and sales taxes rise.

Studies have found that property and sales taxes hit middle and low income families the hardest. [NYT, 1/13]

“States and localities have regressive systems because they tend to rely more on sales and excise taxes (fees tacked onto items like gas, liquor and cigarettes), which are the same rate for rich and poor alike. Even property taxes, which account for much of local tax revenue, hit working- and middle-class families harder than the wealthy because their homes often represent their largest asset.

In contrast to the Governor’s proposal, Democrats have proposed a responsible and fair plan for tax reform in Maine. The Better Deal for Maine prioritizes tax cuts for the middle class, lowers property taxes for all Maine homeowners and invests in our schools, workers and communities. It rejects failed trickle-down economics and instead grows the economy from the middle out.

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