Tax reform is the Evel Knievel of political issues. It gives us the most pleasure when it crashes and burns.
Stupid? Sure, but that’s sort of the point. As Richard Hoffer noted in a Sports Illustrated tribute to the late daredevil motorcyclist, Knievel got famous by attempting to leap bizarre obstacles — double-decker buses, the fountain at Caesar’s Palace, Idaho’s Snake River — and failing.
“It was mystifying until you think about it,” Hoffer wrote, “but America, perhaps secretly, admires conviction over common sense, imagination beyond any grasp of reality, resiliency past adult duty. We like winners, sure, but every once in a while give us a guy like Evel, somebody willing, at whatever cost, to tease all that fun out of failure.”
Meet Maine’s Knievel wannabes: Democratic House Speaker Glenn Cummings of Portland, Democratic state Representative John Piotti of Unity and Republican state Senator Karl Turner of Cumberland. In spite of a $200-million budget deficit, a looming recession, and opposition from both political parties and the governor, they think they can pull off the political equivalent of jumping Mount Katahdin on a motor scooter by passing tax reform.
Cue the ambulance.
The trouble is, that the word “reform” doesn’t translate well into politician-speak. To liberals, it means “increase.” To conservatives, it spells “decrease.” To moderates, it’s interpreted as “shift.” To Democratic Governor John Baldacci, it doesn’t mean much of anything. To voters, it’s a warning to put on the waders, because it’s about to get deep around here.
Unfortunately, all of them are right. Except Baldacci.
Leaping this pit of verbal vipers won’t be easy. But in the Knievel tradition, I’ll try to make it entertaining. Right through the disastrous ending.
Maine’s problem is its income tax. Its top rate of 8.5 percent is ridiculously high, but that wouldn’t be an issue if it only affected the super-rich. Because Maine doesn’t have any super-rich. Instead, that money grab hits even people who make minimum wage. Average workers have most of their income taxed at the priciest rate.
Liberals like that, because it raises lots of money.
Conservatives ought to like it, because it’s almost a flat tax.
Normal people hate it, because the cost of heating oil went up 16 cents a gallon in just one week in early March, and they could use any extra money to heat their homes. Normal people tend to be selfish that way.
Real tax reform would involve a graduated system, which would look less like the steep ramp you’d use if you decided to see if your Harley could leap from Portland’s Eastern Prom to Peaks Island, and more like a chart showing how your waistline has expanded over the last 20 years. At the low end, poor people would pay nothing. For those making more than a subsistence income, there’d be a rate of 2 percent. Over $30,000 a year, hike it to 3 percent. Add a half point for every additional 10 grand, until you reach the old maximum of 8.5 percent, which wouldn’t kick in until you’d raked in $140,000. Don’t forget to include annual adjustments for inflation, so things don’t get out of whack. And schedule an automatic review of the entire system every 10 years, to make sure it maintains its sanity.
This setup wouldn’t provide much of a tax break for millionaires, but it would put extra money in everybody else’s pockets. Conservatives should be happy with that. It’s as if that daredevil cyclist had launched into the air, straight and true.
Wait, is he starting to wobble? Maybe that’s because he’s noticed that a revamped income tax would slash state revenues by hundreds of millions of dollars. That would make liberals all jittery. To avoid a crash landing, tax reform would have to include an additional unpleasant element:
An expanded sales tax.
To balance the books, the state would have to impose a 5-percent levy on lots of transactions that are currently tax-free. You’d have extra money in your pocket, but a significant portion of it would go to pay the tax bill every time you bought a ski ticket, got a haircut, hired a lawyer, placed a newspaper ad, or had your suit dry-cleaned. Gym memberships, accounting services, pedicures, and that mahogany coffin for Poppa’s burial would all carry a surcharge.
A sales tax that covers more items is needed not only to make the books balance, but because Maine’s current tax is so narrowly configured it can’t provide a dependable revenue stream. Most of the money it collects comes from home-construction materials and auto sales, so every time the national economy stumbles, sales-tax collections crash like a speed demon on an oil-slicked road.
Sensible? Sure, but that hardly matters. A recent survey showed Mainers support a broader sales tax in much the same way open water supports slow-moving snowmobiles.
Legislators attempting to bridge the gap between that political reality and common sense had best be wearing flameproof underwear.
I’ve skidded to a halt. Your turn to rev up and e -mail me at aldiamon@herniahill.net.
