Maine's 130th Legislature has had mixed records on tax justice. During one of the most chaotic and tumultuous meetings in recent history, lawmakers took several steps towards repealing the Maine Tax Act before encountering a number of obstacles and tackling other tasks over the next year.
Clear achievements are the removal of an ineffective and costly corporate tax loophole and the expansion of the Earned Income Tax Credit (EITC). Closing the Foreign Intangible Income Deduction (FDII) saves the state $ 8.6 million annually, making tax law fairer as well as freeing up funds for programs that help Mainers in need, not multinational corporations. This happened relatively early in the meeting with the adoption of the first supplementary budget package. The EITC works in the opposite direction, targeting the people who need them most. The inclusion of this expansion in the latest supplementary budget means 100,000 households will be given more funding to make ends meet.
The biggest disappointment is the legislature's failure to pass bills – including one that would have used the increased revenue to further boost the EITC – that lower the estate tax exclusion amount and the taxes for the most wealthy by creating one new upper income tax bracket. These bills received positive votes from the committee but did not make it onto the governor's desk; A common argument against it was increased revenue projections and ample federal funding. With this inflow of revenue, the state has been able to fund important and impactful programs, but the longevity of these commitments may be linked to a desire to see significant tax equity measures adopted in upcoming meetings.
Strong public support for tax justice
Victories don't always mean politics becomes law. Two other signs of support for tax justice are the number of progressive revenue proposals that have been tabled by a wide variety of lawmakers and the increasing commitment of various voices in favor of them. More than a dozen members of the Maine House of Representatives submitted bills that closed loopholes, changed interest rates and parentheses, or otherwise worked to tip the economic balance back in favor of mainers rather than wealthy individuals and large corporations. Sponsors included spokesman Ryan Fecteau, who tabled a bill to create a hazard payment for frontline workers that was funded through the creation of a new income tax bracket targeting family incomes in excess of $ 500,000. And deputy majority leader Rachel Talbot Ross tabled a bill that would reduce the estate tax exclusion amount and bring it back to pre-2010 levels and use that money to build affordable housing.
While not all of these bills made it into law, they highlight specific ways to meet unmet needs of Mainers, as well as general approval of tax justice, which encourages broad and deep public engagement. This year, the tax committee heard from workers, immigrants, environmentalists, small business owners, teachers, health care providers, and organizations advocating for women, elderly residents, and people with addiction problems or mental health services. You even heard wealthy people who would pay more talk about why tax justice is important to our state and our democracy. Many of these testifying groups also came together at that meeting to form Mainers for Tax Fairness, a new coalition of which MECEP is a founding member. Mainers for Tax Fairness' mission is to bring a multitude of voices to the fight for tax justice, rooted in the idea that people and communities are better off when everyone has the resources they need to thrive and to thrive.
More to do
A number of bills that could have a significant impact on Maine's tax law have carried over to next year and are likely to be considered by the Tax Committee in January. These include "LD 428, An Act to Prevent Tax Haven Abuse," which has the potential to close yet another costly and fundamentally unfair loophole used by multinationals to avoid taxes in Maine. Another is "LD 1129, An Act Relating to the Valuation of Retail Sales Facilities". Better known as the Dark Store Bill, this legislation would stop manipulative legal tactics that allow large retail stores to avoid their fair share of local property taxes. Passing these bills would reduce the power of the big corporations that manipulate tax laws in their favor and make everyone else pay for it.
This post originally appeared on mecep.org and is republished here with permission from the Maine Center for Economic Policy.
Photo: The Maine Statehouse. | beacon