Lawmakers in the Maine Legislature heard testimony Tuesday on bills that would require the wealthy to pay a more equitable share in taxes by creating a new income bracket and establishing a surcharge on high levels of money made from capital gains and dividends.
The legislation comes as research has shown that economic inequality has skyrocketed during the pandemic and that raising taxes on the wealthy would help states around the country recover more quickly from the crisis.
LD 495, introduced by state Rep. Laurie Osher (D-Orono), would increase the tax rate on the current top individual income bracket from 7.15% to 8.35%. The bill would also add a new bracket with a tax rate of 11.15% on income over $100,000 for single filers or married couples filing separately, $150,000 for a head of household and $200,000 for married couples filing joint returns or surviving spouses.
In her testimony Tuesday before the Taxation Committee, Osher said one of the biggest challenges Maine faces is generating enough revenue to fund current state services, programs to recover from the pandemic and initiatives to improve life in Maine in the future. LD 495 would help address that issue by yielding an estimated $300 million a year through making changes to the tax code that would only impact the wealthiest 12% of Mainers.
In her testimony, Osher also pointed to the damage done by tax cuts implemented by former Gov. Paul LePage, which largely benefited the wealthy and reduced revenue for crucial services such as public schools that have long been underfunded.
“Mainers deserve better,” Osher said. “This legislation would go a long way to help generate needed revenue without putting an undue burden on the people in our communities who are already struggling to keep up with bills. Middle income Mainers are already paying their fair share in taxes. It is just those at the top that are not.”
Another bill, LD 570, put forward by state Rep. Seth Berry (D-Bowdoinham), also aims to address that disparity. In testimony before the committee Tuesday, Berry said the bill would create a 3% surcharge on “the very highest net capital gains and dividend income levels.”
The measure would impact only 0.7% of the wealthiest people in Maine, Berry said, adding that it would benefit the state by raising revenue to provide “much-needed resources to improve Maine’s schools, strengthen our safety net and build ladders of opportunity.”
The Taxation Committee grouped the hearing on those two bills with LD 532, introduced by state Sen. Joe Baldacci (D-Penobscot). That bill would provide a credit to reduce income taxes by 10% for single filers and married couples filing individually who make under $60,000, heads of households who bring in under $90,000 and married couples filing jointly or surviving spouses who make under $120,000. The measure would also create an additional income bracket with a tax rate of 7.95% that would apply to single filers and married couples filing individually whose income exceeds $200,000, heads of households making more than $300,000 and married couples filing jointly and surviving spouses making more than $400,000.
‘A foundation for building a more ethical and equitable state’
A number of advocates testified in favor of LD 495 and LD 570, which are part of a mosaic of tax fairness bills that have been introduced this legislative session in an effort to balance Maine’s tax code, which asks the poorest in the state to pay more than the wealthiest. Last week, lawmakers on the Taxation Committee heard testimony on LDs 501 and 498, which would raise corporate income taxes and increase taxes on the wealthy, respectively. Mainers who have struggled during the pandemic told legislators during that hearing that the changes to the tax code are necessary to generate revenue to make investments in public programs that can help those most in need.
One person to submit testimony Tuesday was Annie Hikido, a faculty member in the Sociology Department at Colby College, who spoke in favor of LD 495 and LD 570. In her testimony, Hikido noted that many of her students come from privileged backgrounds that have allowed them to more easily weather the pandemic. That stands in contrast to what Hikido has noticed in parts of Waterville, where she has seen “apartment complexes with peeling paint and makeshift window repairs.”
Hikido said the tax fairness bills introduced by Osher and Berry would help ensure that all Mainers have the right to “healthy, meaningful lives” and not just those with access to intergenerational wealth.
“Raising taxes for the wealthy and funneling them into social services for those who were not born into riches is a foundation for building a more ethical and equitable state,” Hikido said.
Another person who submitted testimony in favor of the bills was Stephen Carnahan, a retired pastor who lives in Auburn. Carnahan said raising taxes on the wealthy could help bridge the inequality in Maine between those in poverty and those at the top of the income ladder, noting that “for the past 40 years our society has been funneling its wealth to the wealthy and away from those in the most need.”
“As a pastor, as a Mainer, and simply as a human being, I encourage your support of these two bills,” he said.
The committee also heard a variety of testimony in opposition to the tax fairness bills, with many of the same business and trade groups that opposed the tax bills heard last week also speaking in opposition to LD 495 and LD 570.
The arguments made Tuesday were also similar to those made against the other tax fairness measures, with those opposed to the legislation claiming that the bills would stifle economic growth in Maine, hurt business owners and make Maine a less attractive state for people to move to and do business in.
“We feel very strongly that increasing individual income taxes will impact jobs, investments and will ultimately shrink, not grow, Maine’s economy,” Linda Caprara of the Maine State Chamber of Commerce said in her testimony.
But Adam Zuckerman, the lobbyist for Maine People’s Alliance (of which Beacon is a project), said it’s clear robust investments in public services are needed to help the state recover from the pandemic, noting that the austerity programs Maine pursued during the Great Recession hampered the state’s economic trajectory. Such investments will require that the wealthy pay a bit more, Zuckerman said in his testimony in support of LD 495 and LD 570.
“Fixing our tax code — starting with taking back tax breaks for the wealthy — will make it possible for us to invest in the things that provide opportunity for all families, and ensure every Mainer has a fair chance at a better future,” he said.
Zuckerman added that the need to avoid austerity politics and to ensure the wealthy pay their fair share has been made even more apparent by a provision in President Joe Biden’s recently passed COVID-19 relief package designed to discourage states from cutting taxes during the crisis. Zuckerman pointed out that Maine last week passed a supplemental budget that included around $150 million in tax cuts.
“Unless the wealthy pay their fair share, we could risk losing federal funds that are crucial to vaccinating Mainers, getting the virus under control, and helping our economy recover,” he said.
Photo: Heather Paul | Creative Commons via Flickr
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