AUGUSTA — Grover Norquist, father of the anti-tax pledge that Republican politicians have accepted for years to prove their anti-tax mettle, is urging Maine legislators and Gov. Paul LePage to oppose a comprehensive tax reform package introduced earlier this week by a bipartisan group of 11 legislators.
In a letter to LePage and the Maine Legislature, Norquist, president of the national group Americans for Tax Reform, said supporting the tax reform proposal “is a violation of the Taxpayer Protection Pledge,” under which lawmakers who sign on agree to oppose any tax increase.
“If the goal of the Legislature is to reform the tax code and make the state more attractive to job creators, that goal should be accomplished without increasing the state’s overall tax burden,” Norquist wrote.
Lawmakers from both parties are already raising concerns about the comprehensive overhaul of Maine’s tax code, and Norquist’s letter is a sign of more stiff political opposition that could be on the way.
The bill, LD 1496, would raise Maine’s 5 percent sales tax to 6 percent, eliminate almost all of the nearly 200 exemptions to the tax and broaden it to apply to a number of goods and services that haven’t traditionally been taxed. Those include funeral services, plumbing and electrical work, vending machine purchases, haircuts and dry cleaning.
The higher and broader sales tax would generate $700 million more in revenue for the state.
The plan devotes those additional revenues to slicing the individual income tax rate to a flat 4 percent, eliminating the estate tax and lowering Maine’s corporate rate to 7.5 percent from 8.93 percent. The plan also proposes property tax relief through an expanded homestead exemption that would shield $50,000 of residents’ property value from property taxes and through a modified revenue sharing program that disburses 1.5 percent of state sales and income tax collections to towns and cities with higher-than-average property tax rates.
In his letter, Norquist said he supports individual elements of the reform plan, such as the elimination of the estate tax and the lower corporate and individual income taxes.
“Many of the products and services that will face higher taxes are provided by small businesses, which are disproportionately harmed by this tax hike,” Norquist wrote. “Tax reform must be revenue neutral.”
Proponents of the tax reform plan have called their package “budget neutral,” saying their plan doesn’t raise additional revenue for new spending but enough to address some of the most controversial parts of LePage’s proposed two-year budget that could have a significant impact on property tax bills. Those proposals include LePage’s plan to suspend revenue sharing with municipalities for two years and scale back two key property tax relief programs.
Two of the 11 lawmakers in the bipartisan group supporting the tax code overhaul, Republicans Reps. Dennis Keschl of Belgrade and Gary Knight of Livermore Falls, have signed the Taxpayer Protection Pledge, according to Americans for Tax Reform. LePage has also signed the pledge.
In 2009, a tax reform proposal that broadened the state sales tax in order to fund a lower income tax passed a Democratic-controlled Legislature with just one Republican vote in the Senate. That reform package inspired a successful campaign to repeal it at the ballot box. The energy from that repeal effort spilled into the November 2010 elections when Republicans took control of both chambers of the state Legislature and the governor’s office.