LePage advances plan to remove income tax from retiree pensions

PORTLAND — Gov. Paul LePage on Thursday gave a preview of his ambitious agenda for the January legislative session, including a long-term goal to eliminate the state income tax on all retirement pensions.

LePage told an audience of about 500 listeners at the Greater Portland Regional Chamber event at the Holiday Inn by the Bay that removing income tax on pensions would be controversial, but that it was necessary to keep retirees from fleeing to other states.

The governor said that too many retirees live in Maine for "six months minus a day" in order to claim residency in states where taxes are lower .

"I'd like to keep them here 10 months a year," he said.

LePage acknowledged that ratifying the proposal would be difficult because of the cost. The administration projected that eliminating the income tax on all retiree pensions would cost the state close to $100 million a year in revenues.

House Minority Leader Emily Cain, D-Orono, has said Democrats are open to the proposal. However, similar plans advanced by Democrats have stalled, even when that party controlled the Legislature.

The estimated $100 million price tag could decrease if the governor removes income tax only from certain pensions, such as certain classes of private-sector retirees. However, exempting some pensions and not others could require a political balancing act.

On Thursday, LePage stressed that he would first move to eliminate the income tax from military retiree pensions. However, he stressed that his goal was to remove all income tax from all retirement pension plans.

The following is how much it  will cost the state in revenues to eliminate the income tax on certain classes of employees, according to the Maine Revenue Service:

* $14 million from exempting Maine Public Employee Retirement System income (teachers & state workers).

* $13 million from exempting federal civilian employee pension income (excluding postal workers).

* $11 million from exempting military pension income.

* $55 million from exempting private sector pension income (401ks & other pensions, but not IRAs).

 LePage has previously floated the idea. However, he indicated Thursday that his new proposal would become legislation when lawmakers reconvene in January.

'Clean fossil fuel'

The governor also hinted at new initiatives in energy policy, including a renewed commitment to natural gas. He told the audience the state has to lower energy costs to lure businesses.

LePage hit back against critics who say the governor is opposed to renewable energy, saying his administration is interested in the most efficient and affordable types of energy. He emphasized increased use of natural gas, "a clean fossil fuel" that he said could replace reliance on oil and take advantage of Maine's existing pipeline infrastructure.

The governor made little mention of developing renewable energy sources. During the most recent legislative session, LePage attempted to eliminate a state requirement that Maine power companies increase the amount of electricity they deliver from renewable resources by 2017.

The plan encountered significant push-back from the wind-power lobby, which said it would stunt ongoing development and cost jobs for a minimal savings on consumers' electricity bills.

Republicans on the Legislature's Energy Committee settled on a study commission to review the governor's proposal, a decision that irked LePage.

On Thursday, the governor also:

* Discussed ongoing education initiatives to better prepare students for the work force. LePage said old goals of sending every student to college were unrealistic and contributed to dropout rates. He said school curriculums should be retooled to allow students to pursue vocational trades.

* Said his administration would take another look at welfare reform. The Legislature "did very little" last session to help the state's needy, he said. The system should be changed to help those who "hit a bump in the road," but to curb over-dependence or what he described as "generational poverty," he said.

* Discussed some achievements of the previous legislative session, including a law that allows for the establishment of charter schools and tax cuts that took "$400 million out of government and put it into the hands of the people who can do best with it, the private sector."

* Discussed the early results from the Republican overhaul of the state's health insurance laws. The governor acknowledged that the early returns on the law, known as PL 90 and formerly LD 1333, were creating "winners and losers" for small businesses. He said premiums were rising for some, but that everybody would see savings as the law was fully implemented.

The law is the subject of an ongoing analysis by the Center for Public Integrity. On Thursday, the organization published the first story in a series authored by Wendell Potter, a former communications expert for Cigna Health.

Potter wrote that the insurance companies "hit the jackpot" when LePage and the Legislature pushed through the law.

"The industry’s lobbyists must have been pinching themselves that they were able to get everything they wanted to ensure their employers will reap handsome profits over the next few years," Potter wrote.


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 's picture

Exemptions for pensions

A 401k is not a pension fund. A pension fund is a fund that the employer pays into only. In actuality, there are very few true pension funds anymore. If LePage includes the 401k into the picture, then he has to include the deferred compensation funds that public employees pay into.

 's picture

cut cut cut cut cut

He has "cut" on the brain, but really has no brain function at all if he thinks he can keep cutting state revenue by repeatedly giving the wealthy tax breaks they don't need. The tourism industry had a horrible year, and they'll get another does of that when the quarterly sales tax filings come in between now and the end of the month. There comes a point where there won't be any room left to tighten the belt. he's already handed out a $100 million dollar tax break by eliminating tax on cash estates up to $2 million, now here's another $100 million in revenue he's going to turn down.
Old people with money are not out there creating jobs LePage, they are putting their cash into trusts and brokerage accounts, what his tax cuts are doing is squeezing the middle class, forcing cuts to education, and giving big favors out to his rich friends and campaign donors.

RONALD RIML's picture


I got your 'Liberal' - Robert

This 'Senior' would just as soon pay taxes on his pensions to keep Maine 'viable' for everyone.

Older folks took care of me when I was young and stupid like you.

 's picture

renewable energy lobbyists

Why cannot the Governor make Hydro a renewable energy in Maine?
The power.

RONALD RIML's picture

Lookie here, Dan

Did Ol' Paul send his own family down to Florida for 'Tax Purposes?'

Or do you think it was to teach them how to survive in a "High Crime Environment" ???


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