Comments on the Welcome Back Tax


Press Conference Announcing a Constitutional Challenge to Maine’s “Welcome Back Tax”

Penalizing Families Moving to Maine with up to $2,200 in Higher Income Taxes

My name is Scott Moody and I am the Chief Economist at The Maine Heritage Policy Center.

In addition to the constitutional issues, there are serious negative economic consequences for taxing new residents and commuters.

First, the size of the “Welcome Back Tax” is significant. For a married couple with two children who moves to Maine and earns $55,000 per year will owe $2,200 more in income taxes. They will pay about $3,600 as new residents as opposed to $1,400 if they were an established resident.

Secondly, in a perfect world, Maine’s businesses would be able to find every type of skilled worker they would ever need right here in Maine.

Unfortunately, they cannot. In fact, according to data from the Maine Revenue Services, there are approximately 55,000 taxpayers who file as new residents or commuters each year.

Since Maine businesses are competing nationwide for good workers, they will have to absorb some, if not all of the “Welcome Back Tax.” This will increase the cost of labor on Maine’s businesses and damage their ability to compete in the global marketplace.

Thirdly, even more so than with workers, Maine businesses must have access to out-of-state investors in order to fund their operations. Of the 55,000 new residents and commuters approximately 11,000 are business owners. This is vital life-blood for many of Maine’s businesses.

Unfortunately, the “Welcome Back Tax” will discourage investment in Maine as it will reduce investor’s rate of return. They will seek higher returns in other states.

In the long the “Welcome Back Tax” will mean fewer businesses and fewer jobs for all Mainers.

Thank you. We are happy to answer any questions.