AUGUSTA — The Maine House rejected a bill that would have lowered income taxes using future revenues following long debate last week and more objections voiced on Tuesday.
The vote follows Senate passage of L.D. 849, which is sponsored by Sen. Jonathan Courtney, R-Springvale. More House and Senate votes are needed, but at least 10 Republicans joined Democrats in the House’s 72-6 rejection.
The bill proposes to lower the income tax rate to 4 percent over time by diverting money from the rainy day fund, which is now used as a savings account for the state.
Democrats argued that while it sounded like a good idea, it would eventually reduce state revenues by $600 million a year, which would shift more of the tax burden to towns and schools.
“Yes, it sounds great. Who doesn’t want to lower income taxes? But the impact on our state budget is enormous,” said Rep. Bruce MacDonald, D-Boothbay.
Only one Republican, Rep. Lance Harvell, R-Farmington, spoke in favor of the measure, saying the Legislature should not have repealed similar language in the 1990s.
Taxation Committee member Rep. Seth Berry, D-Bowdoinham, said the bill would help the rich much more than the poor. He said the working poor would see a $1 a year benefit, while those who make $750,000 a year would get a $21,000 a year tax break.
“It commits future Legislatures to finding money we cannot find,” he said.
In recent opinion pieces, Courtney defended his bill, saying it will not allow government to grow.
“Rather than use excess revenue to create new programs, it will return it to taxpayers,” he wrote. “A 4 percent income tax target will encourage people to reside in Maine year-round. It also will support a more vibrant economy when better times return.”
Last year, lawmakers voted to reduce the top income tax rate from 8.5 percent to 7.95 percent. Gov. Paul LePage said recently that while he supports lowering the rate to 4 percent, there’s not enough money available in state government now to cut the rate further.
During House debate, Rep. Robert Duchesne, D-Hudson, said when he explained the bill to people back home, particularly fiscal conservatives, they opposed it. He said he and others believe it’s better for the state to put excess funds in the rainy day account and use it to help pay down state debt and bolster the state’s bond rating.
He said Republicans should reconsider their support.
“Quietly commit this bill back to committee next week and smother it with a pillow,” he said.
Susan Cover — 620-7015
scover@mainetoday.com
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