When it comes down to it, we can live with paying another $5 on a restaurant tab of $100, if it means the income tax rate is cut by 2 percent. We’re happier having that money to spend how we want, rather than letting Augusta politicians spend it as they want.

Admittedly, this is an inch-deep assessment of tax reform, which was passed by the House and Senate on Friday and plopped on the governor’s desk. Gov. John Baldacci has some concerns regarding the bill, LD 1088, so — as of this writing — it’s unclear if he’ll sign it. We hope he does.

Our support is qualified — from the beginning, this bill suffered from an acute case of political-itis. It was drafted to be passed, not effect change. But its architects, burned in past attempts, realized that discretion is the better part of valor and put forward legislation weak enough to be supported.

A 6.5 percent top income marginal tax rate, as contained in LD 1088, is better than 8.5 percent, but is still too high for Maine, whose lower-than-average incomes should prescribe income tax rates in the neighborhood of five percent, or perhaps even lower.

Such a change, by putting more dollars into Mainers’ pockets, would improve consumer confidence. It could also — perhaps most important — help change the image of Maine as a dystopia of burdensome taxes.

The problem is discretion. The high income tax prevents a choice in how the money is spent; 8.5 percent goes to the state, no matter what. Then comes the griping, and calls for policies like the Taxpayer Bill of Rights, because people feel powerless about how their money is spent.

By tilting this balance — through cutting the top income tax rate — these calls may subside. We might get past the evergreen battles of tax burden and move to greener pastures. (This might be an idealistic fantasy, but you never know, it could be possible.)

LD 1088 is the soft start to this, but not its ending. If the reforms work well, they could spur strong future surpluses when the economy roars again. Instead of using these funds for government needs, they should provide lawmakers the cushion necessary to cut the income tax rate again.

Again, this is an easy thought. The financial calculations will obviously have to work. But the principles behind this thinking are sound, and should benefit all Mainers:

1. More money into paychecks;

2. Change the image of Maine as a tax vacuum cleaner;

3. Improve consumer confidence

4. Quiet the ongoing taxation revolts.

5. Improve economic competitiveness.

All alone, these five ideas sound like a winning platform for a future governor’s race. (And what do you know, there’s one coming up.)

For now, though, they remain hopeful goals. LD 1088 is a first step toward them.

editorialboard@sunjournal.com

Copy the Story Link