Despite surplus, Maine House Democrats vote down modest income tax cut

Dome of the Maine State House, 2019.

AUGUSTA – While most observers were anticipating the big floor fight over the attempt to give away Maine’s electoral college votes yesterday in the Maine House, a bill that would have modestly cut Maine’s individual income tax rates was also on the agenda.

Sponsored by Rep. Beth O’Connor, L.D. 1292 “An Act To Lower Maine’s Individual Income Tax” would lower all of Maine’s individual income tax rates over a three year period, but target the largest reductions to lower- and middle-income Mainers.

The top income tax rate would be reduced from 7.15% to 7.0%.

The middle income tax rate would be reduced from 6.75% to 6.0%

The bottom income tax rate would be reduced from 5.8% to 5.0%.

In her testimony, Rep. O’Connor referred to the state’s surplus, which Maine Examiner has reported is equal to about $850 per middle-class Maine family, saying if there is a surplus, she “would think that the natural path would be to offer the people who paid it a tax decrease.”

A review of the Legislature’s public hearing documents on L.D. 1292 shows that not a single person submitted testimony in opposition to the bill.

But Rep. O’Connor’s reasoning, the state’s surplus, and public testimony in support of the bill did little to sway Maine House Democrats, who killed the bill in a straight party line vote, joined by several liberal independent legislators who also voted to oppose it.

The latest reports on Governor Janet Mills’ proposed budget indicate she, along with legislative Democrats, want to spend virtually every penny the state takes in over the next two years, which would leave no room for tax relief in budget negotiations. In fact, some groups are now calling for tax increases to allow for even more spending increases.

Reducing Maine’s income tax had been a high priority for Governor LePage and Republicans in previous years, so much so that Governor LePage even left a proposal to reduce Maine’s income taxes for Governor Mills when she took office.

That proposal does not appear to have been given much weight by Mills, who has focused on bulking up spending in a host of areas in the budget instead.

The bill also would have changed cross references in the Tax Relief Fund for Maine Residents, a fund that is designed to accrue surplus revenue dedicated to reducing Maine’s individual income tax.

You can read the full text of the bill by clicking here.

Along with Rep. Beth O’Connor (R – Berwick) as the bill’s primary sponsor, the bill has nine cosponsors:

Rep. Sue Austin (R – Gray)
Rep. Josanne Dolloff (R – Rumford)
Sen. Dana Dow (R – Lincoln)
Rep. Chris Johansen (R – Monticello)
Rep. Lawrence Lockman (R – Bradley)
Rep. Thomas Martin (R – Greene)
Rep. Lester Ordway (R – Standish)
Rep. Richard Pickett (R – Dixfield)
Rep. Dustin White (R – Washburn)

The bill will now be considered by the Maine Senate.

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