Do the Maine House GOP tax plans favor the rich?
House Minority Leader Ken Fredette objected to that characterization in an op-ed Senate President Michael Thibodeau, R-Winterport, said had “thrown a little gasoline on the fire” and contributed to the breakdown of budget negotiations.
But what does the evidence show?
Take a look at analyses of the House GOP’s most recent plan and its initial proposal.
The most recent public House GOP plan
An analysis by Deputy Finance Commissioner Michael Allen stated, “The distributional analysis is a little better than before, but still heavily weighted to the top end.”
Allen went on to say, “We can fix all this, just let us know if you want us to try.”
You can see that part of the Allen memo below and read the full memo via the link.
By the way, Allen was appointed about a year ago as part of Gov. LePage’s “leadership team on state spending and revenue management.”
To understand what Allen meant by “a little better than before,” take a look at the House GOP’s initial plan.
Of the three plans proposed — by Gov. LePage, Democrats and the House GOP — the House GOP’s is best for people at the top of the income distribution.
Even more, when all forms of taxation are taken together, the House GOP plan raises taxes on Maine people who are low-income and middle class.
As an analysis by the Maine Center for Economic Policy and the Institute for Taxation and Economic Policy finds:
When it comes to improving the overall fairness of Maine’s tax system, the Republican tax plan does the most harm. Rather than improve tax fairness, the Republican plan actually makes a bad situation even worse.
The Republican plan actually raises taxes for, low- and middle-income Mainers, while high-income Mainers get a huge bonus. [source]
Compared to the Democratic “Better Deal” plan, the House GOP plan clearly emphasizes tax cuts for people at the high end of the income distribution.
But it’s not just in comparison to the Democratic plan that the GOP plan looks more skewed to the top.
In the below graph, you can see how much better the wealthy do in the House GOP plan compared to Gov. LePage’s plan.(source)
So it’s rather clear that the House GOP, led by Minority Leader Fredette, has been promoting tax plans that favor the rich.
If the House GOP wanted to change that, they could follow MECEP’s advice regarding their initial plan:
The Republicans could change their mix of winners and losers in several ways. They could restructure their income tax cut to deliver more targeted benefits to low- and middle-income taxpayers, not just the wealthy. They could pair income tax cuts with property tax cuts which will deliver greater benefits to low- and middle-income taxpayers. Or, they could expand tax credits like the property tax fairness credit or the earned income tax credit to deliver more tax relief to low- and middle-income Mainers.
According to the Allen analysis, their revised proposal didn’t move that direction much at all, but is still “heavily weighted to the top end.”
Maine’s tax system is already regressive. The House GOP plan would make it even more regressive.
Based on this hard evidence, the House GOP tax plans have indeed favored the wealthy.
Recommended additional reading: Column by Douglas Rooks about Maine budget politics and policy