Creature from the Black Lagoon

Tax reform: it's downright scary
By AL DIAMON  |  October 26, 2011

I don't believe in ghosts. Or vampires. Or werewolves. Or other mythical creatures, such as Republican US Senate candidate Scott D'Amboise.

But I'm willing to concede that those Halloween haunts are a lot more likely to exist than an even scarier entity:

Tax reform.

According to news reports, the Legislature's Taxation Committee has all but abandoned its efforts to make Maine's tax structure fairer and less burdensome. Which makes sense, because taxes are, by definition, both unfair and an unpleasant burden. If they weren't, the entire system we use to fund government would collapse, and we'd all be forced to live like Occupy Wall Street protestors. Except with better clothes and nicer haircuts.

Taxes aren't supposed to be fair. If they were, you'd pay only for what you needed. People with jobs wouldn't foot the bill for welfare. People without kids wouldn't be charged for schools. Young people wouldn't have to chip in to fund a financially questionable retirement system. And because it does nothing noticeable for anyone, nobody would have to cover the costs of the Maine Department of Economic and Community Development.

As for the burden, it's easy to say the rich should pay more than the poor, but in reality, the only way to balance the state budget is to hit up the middle class, simply because that's where most of the money is. It's all well and good to talk about sparing the working people, but any tax system that doesn't put some pain on that group won't raise enough cash to cover the nut. And any tax plan that extracts a sufficient sum from the bourgeoisie to keep the bureaucracy rolling will generate a certain amount of political outrage.

In 2010, legislative Democrats deluded themselves into believing these rules no longer applied. They broke with their long tradition of dithering ineffectuality and passed a tax-reform measure that reduced the income tax while broadening the sales tax. It was supposed to be revenue-neutral. It was supposed to ease the burden on average Mainers by shifting it to tourists and rich people. It was supposed to appeal to Republicans, who have long advocated taxing consumption rather than the accumulation of wealth.

In fact, it was none of that, and the GOP promptly launched a People's Veto campaign and repealed it. Building off the momentum generated by that successful effort, Republicans took control of state government last November, only to discover that they had inherited the responsibility for solving the tax-reform problem. They immediately decided to embrace that dithering ineffectuality thing the Dems did so well.

To be fair, the GOP passed a tax cut, increasing the estate-tax exemption and reducing the income tax in 2013 by an annual amount that won't pay the typical household's dry-cleaning bill on its Bigfoot costumes. Those changes will create a $400 million hole in the next biennial budget that nobody has yet figured out how to fill.

Meanwhile, Republican Governor Paul LePage has decided to eliminate the income tax on pensions, a move that will add another $100 million to the future shortfall. LePage hasn't yet explained how he'll balance the books, although one way he could do it would be to slash general purpose aid to cities and towns. Which would raise local property taxes by $100 million. Which sort of defeats the whole purpose.

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  Topics: Talking Politics , Politics, Taxes, Paul Lepage,  More more >
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