Analysis of proposal to cut income taxes, increase sales tax fuels debate over LePage's budget

A new analysis of Gov. Paul LePage's ambitious tax overhaul proposal is bolstering both supporters and opponents as the first votes on the Republican's plan grow near.

LePage hopes to slash the personal and corporate income tax while raising the sales tax and applying it to more services.

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The governor says a report released by the Office of Tax Policy on Monday outlining how the plan would impact residents underscores it's "fairness and equity." But Democrats contend it proves LePage's effort would primarily benefit the wealthy.

The report says that the governor's proposal would lower Mainers' overall tax burden by $238 million in 2016 and $292 million when it's fully implemented in 2019.

Maine residents would receive an average tax decrease of $416 in 2019, according to the report. At the same time, 60,000 low-income residents would no longer have to pay the state income tax, the administration says.

"Mainers win under my plan, and this report shows just that," LePage said in a statement. "In the first year alone, $238 million will be kept by hardworking Maine people, allowing them to save, invest and put more into the Maine economy."

But Democrats are ramping up their attacks on the plan, saying it doesn't do enough to help lower-and-middle income families.

They note that those who make about $400,000 would get a tax cut of more than $10,000 in 2019 while those who make $40,000 would get a $145 tax cut.

"There is a really big disparity there," said Rep. Matt Moonen, a Democrat from Portland who's on the Taxation Committee. "We need to figure out how to make this budget as fair for all Mainers as possible."

Democrats say they also fear education will be on the chopping block when the income tax cuts lower state revenue in the future.

"LePage threatens even more cuts in order to give the wealthiest 1 percent another $10,000 tax cut," said Katie McDaniel, president of a Parent Teacher Organization in Auburn who joined other activists with the liberal-leaning Maine People's Alliance to protest the governor's budget at the Statehouse on Tuesday. "There aren't even words for it. It's just fundamentally wrong."

LePage has acknowledged that his tax plan — part of his more than $6 billion budget proposal — faces a tough road in the Legislature. He will need Democratic support to get it through the House, where that party holds the majority.

The Taxation Committee is expected to make a recommendation on the proposal by April 1. It will then be scrutinized by the Appropriations Committee. A budget must be in place by June 30.


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