Two Republicans joined the entire House Democratic caucus on Tuesday in a vote to amend Gov. Paul LePage’s tax conformity proposal, effectively cancelling a new tax break benefiting mostly large corporations and instead filling a $23 million hole in local school budgets.
“We should have a fair tax system that works for Maine and supports the things our state needs, including strong schools and vibrant communities,” said Rep. Ryan Tipping-Spitz (D – Orono), who sponsored the amendment. “In this case, there were very serious questions about this tax break. We shouldn’t spend money we don’t have on a program when we’re not sure if it even works.”
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The amended bill limits the Maine Capital Investment Credit, which is targeted to companies that make more than $2.5 million in annual business equipment purchases, to just one more year. Tax expert Albert DiMillo has called the credit a “waste of Maine taxpayers’ money” as well as “totally ineffective and mathematically challenged.” A recent Bangor Daily News editorial cited a dismal review of the program’s efficacy by the non-partisan Congressional Research Service and described the the tax break’s stimulative effect as “minimal at best.”
The amendment also closed a $23 million gap in school funding revealed by the Department of Education last week. If unaddressed, the deficit would leave 131 school districts struggling to fill budget holes and towns across the state would be forced to cut local services or increase property taxes to balance their books.
The vote maintained the tax conformity portions of the tax package, including matching federal tax breaks for homeowners, students, teachers and small business owners.
“We refuse to have our families pay for ineffective and costly tax breaks while simultaneously neglecting our students and schools,” said House Speaker Mark Eves (D – North Berwick) in a statement following the vote. “Today Democrats agreed to responsibly fund tax conformity, shine a light on credits that may not work for Maine, and address other critical needs facing our communities.”
Representatives Dick Campbell of Orrington and Norman Higgins of Dover-Foxcroft voted with majority Democrats in favor of the amendment while all other Republicans voted against, supporting the full corporate tax break and opposing the education funding. Because the Senate previously approved a different version of the bill that included the corporate tax break, the legislation will now likely go before a conference committee and may face additional votes.