Maine wealth tax advancing in state Legislature

Critics say levy will hurt the state's economy as it recovers from the pandemic.

Updated: May 22, 2021 - 10:49pm

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A proposal to tax Maine's top earners is working its way through the state Legislature, but critics say it will hurt the state's economy as it recovers from the pandemic.

LD 498 would add a 3% surcharge to raise Maine’s income tax for individuals with taxable income of $200,000 or more a year. This new surcharge would drum up an estimated $209 million a year in new revenue for the state.

The measure was narrowly approved this week by the Legislature's Taxation Committee in a 7-6 vote that went along party lines, with Democrats backing the proposal.

In discussion ahead of the vote, Sen. Ben Chipman, D-Portland, co-chairman of the committee, said he sees the proposal as a part of a broader discussion about fairness of Maine's income tax system and whether the state should move to adopt a progressive system that’s based on an individual's ability to pay.

"If someone is making $1 million a year they can afford to pay a higher tax rate than somebody who is making $20,000 a year," Chipman said.

Republicans criticized the push to tax the state's wealthiest, saying it would hurt taxpayers, cost jobs, drive away investment and hamper the state's economic recovery.

Sen. Matthew Pouliot, R-Augusta, the ranking Senate Republican on the panel, said it's "unfathomable" that lawmakers are even talking about tax increases in the wake of a pandemic.

"We have to reprioritize our spending in state government," he said Tuesday. "What we really have is a priority problem in Augusta, not a revenue problem."

The measure has drawn strong opposition from the business community, which says it would hurt the state's competitiveness and encourage wealthy taxpayers to leave for other states.

The bill now heads to the full Legislature for consideration but it's fate is anything but certain. It also faces a likely veto from Gov. Janet Mills, a Democrat who has pledged not to increase taxes.

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