There’s certainly no shortage of controversial issues in our politics these days. Tax conformity is one of those controversial issues that the Legislature will be working on in the last month of this session. Maine has to decide how closely our tax code will mirror what the federal government is doing.
Last year, Congress skirted the usual legislative process to jam through a package of tax breaks that disproportionately benefit those individuals who are already doing very well and the largest multinational corporations at the expense of working families. It balloons the national debt with little chance any of us will see any long-term benefits.
Unlike Congress, the Legislature is taking the time to fully review any proposed tax policy changes before they can be pushed out for a vote. I serve on the Legislature’s Taxation Committee, and, last Thursday, we heard testimony from dozens of Maine people who don’t think we should follow in Washington’s footsteps on tax policy. The good news is that we don’t have to. Unlike some states, Maine’s tax code does not automatically change with the federal tax law. We have the opportunity to choose which tax changes we adopt, if any.
One of the proposals for conformity would eliminate the personal exemption. The federal plan attempted to balance that by raising the standard deduction to make up for the tax increase most Americans would face. Maine’s standard deduction is already at the federal level, so if we decided to accept conformity, it would result in a massive tax increase.
The governor’s proposal attempts to account for this by creating a new exempt tax bracket. While that would solve the problem for low- and middle-income Mainers, it also results in a new tax benefit for high-income Mainers who always made too much for the personal exemption. That would be a step backwards when it comes to tax fairness and building an economy that works for everyone.
Another particularly troubling aspect of conformity involves accelerated depreciation. That’s a tax policy tool we employ to encourage business investment and job creation. Allowing a business to write off the future value losses of newly purchased equipment can be extremely important for small businesses that are trying to grow and expand. If we accept full tax conformity, however, businesses who have a limited presence in Maine could potentially write off the depreciation of equipment purchased anywhere in the country. Maine taxpayers shouldn’t be on the hook for subsidizing economic development in California. Whenever possible, Maine tax dollars should stay in Maine.
During the public hearing for tax conformity, I heard over and over that tax policy should reflect our priorities. I believe Maine’s priorities should be our working families. Not all of the proposals in the tax conformity package are out of line. Increasing the child tax credit, for example, is one way that we can use tax policy to benefit average families. For the life of me, I can’t understand why we should prioritize tax benefits for out-of-state corporate investments, or low taxes for people who can afford to pay their fair share.
As always, please feel free to call or e-mail me if you have any questions or concerns.
Rep. Maureen “Mo” Terry is serving her first term in the Maine House of Representatives. She is a chef and small business owner with more than 25 years of experience in the food service industry. She serves on the Taxation Committee.
(207) 712-9735 | (800) 423-2900 | maureen.terry@legislature.maine.gov