I am aware that long, drawn-out debates over tax conformity and Maine’s tax code typically causes people’s eyes to glaze over. It is one of those issues that we, your elected representatives in the Maine Legislature, are supposed to just take care of for you. Unfortunately, if the Legislature drags its feet on this issue, it will result in irreparable damage to our state’s businesses and the overall business climate here in Maine. So, please bear with me as I outline the issue and the impact this could have.

Unfortunately, if the Legislature drags its feet on this issue, it will result in irreparable damage to our state’s businesses and the overall business climate here in Maine. So, please bear with me as I outline the issue and the impact this could have.

What I am talking about is tax conformity.

It is about whether Maine conforms to the recent permanent changes made to the federal tax code. The changes include deductions and credits for Maine teachers who spend money out of pocket on classroom supplies; a tuition deduction for low- and middle-income earners; and tax incentives and credits for Maine small businesses that promote job growth and send a message that business capital is welcome in Maine.

If Maine does not conform, it would mean, essentially, a $38 million tax increase on the Maine people and Maine businesses.

The biggest stumbling block with this issue here in Augusta are deductions known as Section 179 and something called bonus depreciation. In Maine, it is called the “Maine Capital Investment Credit.” These deductions allow companies to deduct new equipment and software purchases up to a certain capped amount.

Maine typically conforms to the federal tax code and businesses in Maine operate under the assumption that they will get these deductions every year. The money that Maine companies save allows them to make more capital investments in Maine and hire more Mainers.

Unfortunately, those who oppose tax conformity, mostly special interest groups such as the extremists at the Maine People’s Alliance and their anti-business, anti-job growth allies, paint these deductions as nothing more than “multi-million-dollar tax breaks and profit windfalls” for large, wealthy out-of-state corporations. This type of uninformed talk is nonsense and I urge all of my legislative colleagues not to buy into this wildly irresponsible rhetoric.

Let me be clear: Those who benefit from these tax incentives are not large corporations. They are the “mom-and-pop shops” that are found in every Maine town. They are small businesses, struggling to make ends meet, who count on these deductions and returns to allow them to stay afloat during the lean months. They help small businesses in Maine compete nationally and globally.

They are small businesses, struggling to make ends meet, who count on these deductions and returns to allow them to stay afloat during the lean months. They help small businesses in Maine compete nationally and globally.

The bill was voted out of the Taxation Committee Monday with Republican members voting to conform to the federal tax code while Democrats voted to create more unpredictability. Now the bill heads up to the Appropriations Committee before votes by the full House and Senate.

As legislators, we were elected to improve the business climate in Maine to promote investment and job growth. We were not elected to create an unstable and unpredictable climate for Maine businesses to operate. The longer we wait to pass this tax conformity bill, or if for some reason we fail to pass it, that is exactly what we will be doing.

During the public hearing on the bill, dozens of small businesses and accountants implored the Taxation Committee to pass tax conformity.

Sheena Davis, a Portland CPA who represents multiple small businesses, told the Taxation Committee: “While there is a common misconception that these provisions only help the very large businesses, this simply isn’t the case. The costs of equipment and improvements are often necessities for even my smallest clients.”

Tim Walton of Cianbro, headquartered in rural Pittsfield, told the Committee: “This bill is certain to have a significant and positive impact on Maine’s economy.”

Those are just a few samples of the hours of testimony given during the public hearing on this legislation.

I believe small businesses are the lifeblood of the Maine economy. When the public takes time out of their day to come to Augusta in these types of numbers, we need to be listening to them.

Now is the time to pass tax conformity. Delaying this important measure is holding up tax returns for thousands of Maine people and Maine small businesses. Those refunds put money into the Maine economy at a time when it is needed more than ever.

Jeff Timberlake is the state Representative for House District 75, which includes Turner, Leeds and part of Livermore. He lives in Turner.


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