Maine People’s Tax Burden Now Highest Ever

0 Comments

Read the full report | The latest figures from the U.S. Census Bureau show that the difference between the average tax burden and the Maine tax burden cost every man, women and child in the state an extra $401 in fiscal year 2006. In fact, the state and local tax collections have exceeded 14 percent of Maine Personal Income for the first time. That amounts to one of every seven dollars earned in Maine!

Unfortunately, the data only supports what most Mainers already know—Maine’s state and local tax collections as a percent of personal income (hereafter “tax burden”) are increasing at an unsustainable rate. In fact, Chart 1 shows that Maine’s state and local tax burden hit a new all-time high of 14.02 percent—an increase of 4.7 percent from FY 2005 (13.39 percent). In other words, this means the state and local tax burden grew 4.7 percent faster than Mainers’ paychecks.

Nationally, state and local tax burdens were up 2.3 percent to 11.25 percent in FY 2006 from 10.99 percent in FY 2005. This means that Maine’s tax burden grew at a rate twice as fast as the national average. The tax burden gay between Maine and the national average is now at the second-highest level of all-time of 24.7 percent.

In FY 2006, Maine’s tax burden ranked as the 4th highest in the country. However, this is misleading because both Alaska and Wyoming have been rising rapidly in the rankings due to their heavy reliance on the severance taxes (taxes levied on the extraction of natural resources such as oil, natural gas, coal, etc.). Excluding Alaska and Wyoming puts Maine at the number two spot behind New York.