State Sen. Tom Saviello of Wilton made headlines Wednesday when he submitted legislation to raise income taxes on high-income Mainers from 7.95 to 8.5 percent.
The proposal was news, but here’s the real shocker: Saviello is a Republican.
If there is a single issue that defines the Republican Party in this country it is cutting taxes, not increasing them.
Gov. Paul LePage has consistently said Maine’s income tax rates are too high and he even pushed through a small rate cut in 2011 that got national attention.
LePage has been adamantly opposed to any tax increases for individuals and businesses, although he has made an exception for one Maine industry, newspapers. He has proposed extending the state’s sales tax to individual newspaper purchases, apparently as punishment for occasionally irritating him.
Saviello’s proposal would apply to people earning more than $250,000 and would raise a relatively insignificant amount of money, about $5 million per year. The state’s budget deficit is someplace north of $500 million.
We’re not saying Saviello’s idea is good or bad, but it does for the first time raise the possibility of a bipartisan approach to our state’s financial troubles that includes both cutting services and raising revenue.
There are other, perhaps better, options, one of which might be closely examining the state’s multiple tax-incentive programs.
A legislative study in 2010 found that Maine lost more on special credits, exemptions and tax breaks than it spent at the time on all state government functions. In other words, about half the taxes we levy are later waived or refunded.
Then-Finance Commissioner Ellen Schneiter told the Capitol News Service that Maine has 141 personal and corporate income and property tax reimbursement programs.
Each of these tax breaks was designed to accomplish a public purpose, but most have no sunset provision and few have been audited to see if they still accomplish their intended purpose.
A study in 2010 found that 11 programs related to economic development warranted “further analysis and review.” But when Republicans came to power in 2011 that analysis was abandoned.
Facing huge cuts in municipal revenue-sharing in the next biennium, more legislators — including Republicans — are beginning to see that while spending cuts are important, shifting $400 million in state spending to local property taxpayers is simply passing the buck.
Two years ago, California was facing a $24 billion budget deficit and was paralyzed by political gridlock. Its problems seemed insurmountable.
Gov. Jerry Brown came into office promising severe cuts, as well as tax increases.
Unable to get legislative support, Brown put his plan on the ballot and it was approved by voters who felt the state had done enough cutting of critical services.
Brown recently announced he had not only closed California’s budget gap, but the state would produce a small surplus in 2013.
Critics will be quick to point out that Sen. Saviello was a Democrat until 2005 and is known as a moderate Republican, meaning he is not representative of his fellow GOP legislators.
But Saviello’s proposal might be an indication that other Republicans are willing to compromise on a balanced solution to Maine’s budget problem.