The greater the income, the greater the difference between what a Maine family pays in comparison to an equivalent income family nationally.

Many Maine residents suspect that they pay significantly more state income taxes than people in other states. A recently completed study unfortunately confirms their suspicions, that at most income levels Maine has one of the highest income taxes in the country. Even often derided Massachusetts, fondly known as “Taxachusetts” by many of its citizens, generally imposes less of an average income tax burden than Maine.

How high are Maine taxes compared to the rest of the nation? A family income of $35,000 is taxed at an incremental rate of 7 percent, the fifth highest rate in the country. Only Hawaii, Oregon, Montana and Idaho have higher rates. It does not get any better at $55,000, where Maine passes Idaho and Hawaii with a rate of 8.5 percent. In the area of state income taxes, Maine is a heavyweight by any standard of measurement.

Maine singles with incomes over $15,000 and families with incomes over $30,000 pay more state taxes than most of their counterparts across the country, and the news gets worse the more you earn.

A single Mainer earning $25,000 per year will pay an average of $944 compared to the national average of $680, a 39 percent higher tax burden. A single with an income of $50,000 gets hit even harder, paying $3,069 against a country average of $1,885, an enormous 63 percent difference.

If you are part of a Maine family looking for tax relief, the best alternative may be to move out of state. A family income of $50,000 results in an average Maine tax of $2,010 versus the national average of $1,491. Again, the greater the income, the greater the difference between what a Maine family pays in comparison to an equivalent income family nationally. At $75,000 a Maine family pays $1,437 more than an average family elsewhere, and at $100,000 the tax burden is an additional $2,302.

You get the point by now. Other than at low income levels, Mainers pay significantly more state taxes than most other people do. The skeptics among us may reluctantly agree, but also are quick to note that this must be part of the high price of living in New England.

Maine citizens find little solace with this comparison either. A family earning $35,000 in Maine, for example, pays the second highest taxes in New England, beaten only by Massachusetts. Not to be outdone, Maine moves into first place at levels of $55,000 and above. One bit of advice: do not get divorced and think your tax situation will improve. Singles get treated just as harshly as their married counterparts at virtually all middle and upper income levels.

Well, now what do we do? Our property taxes are high and getting higher, we have established that Maine has one of the highest state income taxes in the country, and the state is still looking down the barrel of a $1.1 billion state deficit. It is no wonder that newly elected Gov. Baldacci has recently stated he did not want any new taxes. What is his choice? To raise already high state income taxes even higher, possibly causing a flight of either people or capital from the state? Not likely. Let’s face it, most or all of the deficit will be covered by cutting state expenses.

It was not very long ago that our former governor and the Maine Legislature were fighting over how to spend our surplus. Some legislators wanted road improvements. Angus King wanted laptops. Do you remember many of our elected officials suggesting that we should either cut taxes when we still could or, perish the thought, actually save the money? Lost over the fighting frenzy of to how to spend the surplus was the fact that we might actually need it at a later date.

Now, our only practical choice is to reduce government expenditures, an act that usually affects the disadvantaged the most, and also occasionally results in unpopular cost-cutting decisions like prematurely releasing low risk prisoners.

Keeping taxes high during good economic times, as Maine has clearly done, limits our choices during bad economic times. States that have been reasonable with their income tax structure during good times, such as Connecticut, can afford to raise taxes during periods of deficit. States that have maintained high tax rates irrespective of economic conditions, however, will eventually have to suffer the same fate as Maine.

Perhaps our Legislature could learn the simple lesson we try to teach our children – save a little for a rainy day.

John Zerillo is an assistant professor of business administration of St. Joseph’s College in Standish and is the chairman of the board of directors of Gorham Regional Federal Credit Union.


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