Tax Code Update From Denise Tepler
I want to update you on a critical vote we took Tuesday. It concerned the relationship between Maine’s tax code and changes Congress recently made to federal taxes. The Maine House gave initial approval to a fiscally responsible measure that provides clarity for tax filers and tax relief for homeowners, students, small businesses and teachers. It also provides $23 million for public education to protect taxpayers from a cost shift. As a member of the Joint Standing Committee on Taxation, I have been deeply involved in this bill’s evolution.
I support the elements of this bill that help Maine’s middle class and small businesses grow and thrive. Those include the addition of mortgage insurance to the mortgage interest deduction, deductions for higher education costs, incentives for small businesses and deductions for teachers who use their own hard-earned money to provide supplies in their classrooms.
The House version of the bill conforms fully to the federal tax code in all the areas where Maine has traditionally conformed, but differs from the governor’s version in two important ways.
First, it provides this additional $23 million to local schools to address the fact that many school districts would be getting less – sometimes significantly less – state funding in the upcoming school year. We want to protect our classrooms, and property taxpayers – Topsham’s families, local businesses and seniors who find it harder to stay in their homes when town property taxes spike.
Second, it discontinues the Maine Capital Investment Credit in 2016. This was a program created as a temporary response to the recession and we need to review whether it has actually created jobs as intended. We do not want to put your money into a program we are not sure makes a difference for creating good jobs in Maine.
The Maine Capital Investment Credit has been part of our state’s version of Federal bonus depreciation, but it is not a precise mirror of the federal version. Primarily benefiting large multi-state corporations, it could cost Maine taxpayers $22 million over 2 years. Our bill provides the opportunity to evaluate the credit’s performance while leaving it in place for the 2015 tax year so businesses can get on with filing their taxes.
This important measure faces further action in the both the House and Senate. I will continue to keep you updated on the debate.