Testimony: Saving Mainers from Numerous Tax Increases


Testimony in Opposition to LD 1946, “An Act to Amend the Income Tax Law to Expand the Middle Tax Bracket, Increase the Lodging Tax and Increase the Short-term Automobile Rental Tax”

Senator Grohoski, Representative Perry, and the distinguished members of the Committee on Taxation, my name is Nick Murray and I serve as director of policy for Maine Policy Institute. We are a free market think tank, a nonpartisan, non-profit organization that advocates for individual liberty and economic freedom in Maine. Thank you for the opportunity to testify in opposition to LD 1946.

The sponsors of this bill should answer a simple question: Why should the state government reap the benefits of record inflation while it gets harder for everyday Mainers to make ends meet? 

Maine is in a terrible place in terms of economic competitiveness, not only nationally, but compared to our New England neighbors as well. A big part of this is our inordinately oppressive tax regime. 

In addition to offering third-highest tax burden in the nation, Maine taxes single-filers’ earnings up to $100,000 per year more than any other New England state.Maine has been in the bottom 10 in Forbes’ rankings of state business climates since it began, currently 44th. The cost of doing business is 9% higher than the national average, and the cost of living for Mainers is 15% higher.

Assuming the passage and enactment of Gov. Mills’ proposed supplemental budget, in the next biennium, the State of Maine will be spending 20% more per resident, even accounting for inflation. Have Mainers received a better economy or a more responsive government for all this extra spending, from which the rationale for higher taxes comes?

LD 1946 would only exacerbate these issues, diverting more money from the productive sector of the economy to the government, whether through higher income taxes, or higher sales taxes for various industries integral to the economy. The last thing Mainers need are higher taxes.

Taxes should only be levied on the same dollar once, if at all. It is not right for the government to tax your earnings before you even see them, then also tax you when you spend those earnings. Of course, it doesn’t end there. The state also taxes your property after you’ve bought it, simply for owning it for another year, and finally, it takes a portion of whatever you have left when you die. This is far from fair.

LD 1946 would raise the lodging tax from 9% to 11%, and raise the tax on rental cars 10% to 15%. As much as the sponsors might think these would be “tourist taxes,” this is not possible. These increased costs must also fall on Mainers, as well as tourists. Residents like to take vacations in Maine too, supporting the great local restaurants, hotels, and bed-and-breakfasts that our beautiful state has to offer. These small businesses need Mainers to patronize them in the off-season. Higher taxes on lodging would make that more costly too, to the detriment of both Maine residents and business owners.

This bill would also slightly raise the income thresholds for the state income tax brackets, and expand the scope of the middle bracket. While it would raise the income amount at which the middle bracket kicks in by 9.2% to start at $23,000/year for a single filer, it would also raise the amount at which the top bracket kicks in by 28.9%, to start at income earned more than $64,450. 

Unfortunately, even though this bill mostly plays on the margins, it would still amount to a tax increase for Mainers who have been forced to fork over more and more of their money to a state government which has accumulated record tax revenue in recent years. The most prudent move would be to significantly cut income tax rates, while consolidating into a single bracket, also known as a flat tax.

The last thing Mainers need is higher taxes. Please deem LD 1946 “Ought Not To Pass” and continue to reject these sorts of out-of-touch attempts by politicians to take more of our earnings without consent.  Thank you for your time and consideration.