Gov. LePage demands $22 million in new corporate tax breaks, refuses to pay for them
Memebers of the Maine Legislature’s Taxation Committee tabled Gov. Paul LePage’s $38 million tax conformity package yesterday after administration officials refused to say how the plan, which includes a new $22 million tax cut to benefit mostly large, out-of-state corporations, would be paid for.
“Only in political la-la-land would a person support politicians who fund $22 million in kickbacks for big corporate filers headquartered out of state without knowing how to pay for it,” said Rep. Adam Goode, D-Bangor, House chair of the Taxation Committee. “It’s particularly frustrating that the LePage administration is holding up tax relief for small businesses, teachers, homeowners and students so it can hide a secret stash of funding.”
A central issue in the legislation is a practice called bonus depreciation, which would see $11 million spent this year alone on a “Maine capital investment credit,” provided to corporations that purchased business equipment in 2015.
Although it is often billed by Republicans as a simple tax conformity issue or as a stimulus measure to promote investment, the governor’s proposal would not conform the state to federal law and the fact that only financial decisions made in the previous year would qualify means it is essentially a handout of government funds in the form of low-interest loans to mostly large corporations.
The non-partisan Congressional Research Service’s review of the studies on bonus depreciation found that it “is largely ineffective as a policy tool for economic stimulus.”
Maine People’s Alliance political director Ben Chin, in testimony before the committee, called it “an Orwellian mess of contradictory flaws.”
Rather than make a case for why and how bonus depreciation and the other tax measures should be funded, LePage administration Finance Commissioner Richard Rosen instead told committee members that the administration would only share information about funding sources once legislators approve the bill.
“The Taxation Committee isn’t a rubber stamp for anyone, including the governor,” said Sen. Libby, lead Senate Democrat on the committee in response. “We have to do our due diligence, and that means we need the information required to make good policy decisions for the people of Maine. The administration can’t hold necessary information and expect us to sign a blank check.”
In response to the tabling of his bill, Gov. LePage released a statement saying the committee had “abdicated its responsibility to make a timely decision on a topic of the utmost importance to both Maine businesses and individuals.” He again declined to provide information on a funding mechanism for the new corporate tax breaks.
Photo: Ben Chin testifies before the Taxation Committee earlier this week.
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