“The Administration’s latest tax proposal as amended by the change package is not an improvement over, and in some respects is worse than, the original plan. The cost over the 2012-2013 biennium (not including the revenue that would be realized from the 20% cut to the Maine Residents Property Tax and Rent Refund Program and the Business Equipment Tax Reimbursement Program) is roughly the same, almost $200 million, but the cost in the 2014-2015 biennium is approximately $399 million, more than $100 million more than the original proposal.”
Senator Rosen, Representative Flood, and distinguished members of the Joint Standing Committee on Appropriations and Financial Affairs. Thank you for the opportunity to offer testimony on the change package to My name is Dan Coyne, and I am the Legislative Director with the Maine Center for Economic Policy (MECEP). MECEP advances public policies that help Maine people prosper in a strong, fair and sustainable economy.
In February, I had the opportunity to testify before this Committee about the Administration’s original tax plan as presented in the proposed biennial budget. At the time, I testified about MECEP’s concerns: the tax provisions were too expensive and too heavily favored a small percentage of wealthy Mainers while underinvesting in our working families and public employees and retirees. Additionally, the tax provisions would do little if anything to create jobs.
Unfortunately, the Administration’s latest tax proposal as amended by the change package is not an improvement over, and in some respects is worse than, the original plan. The cost over the 2012-2013 biennium (not including the revenue that would be realized from the 20% cut to the Maine Residents Property Tax and Rent Refund Program and the Business Equipment Tax Reimbursement Program) is roughly the same, almost $200 million, but the cost in the 2014-2015 biennium is approximately $399 million, more than $100 million more than the original proposal.
The unfairness of the tax cut proposal is substantially the same as the original plan. Almost 63% of the income tax reductions go to Mainers earning more than $82,622, and almost 44% goes to those Mainers earning more than $117,914. The top 1% of income earners, those earning $356,608 or more, will receive about 13% of the income tax cuts, or an average tax reduction of $2,905 in 2013. Between 550-600 estates will benefit from the estate tax changes.
Simultaneously, the change package calls for cuts to various programs and services, which will continue a trend of underinvestment in our working families. For example, the package includes cuts to health care for 30,000 low-wage working parents and poor childless adults. Such cuts will do little if anything to create jobs. Indeed, experience has shown that tax cuts for the wealthy will do less to create jobs than investments in people and infrastructure.
Maine’s budget reflects our collective economic priorities and societal values. Unfortunately, these tax proposals do not reflect our mutual aspirations, but rather represent an imbalanced approach to balancing the budget.
Thank you for the opportunity to speak, and I am happy to answer any questions you may have.
Dan Coyne, Fiscal Policy Analyst, speaking before the legislature’s Appropriations Committee in opposition to the Administration’s tax proposal in the state budget.
