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Tax Forum recommends cutting income tax
By Elizabeth Prata

Gray--Maine is one of the nation's slowest growth states. There are many reasons why this is so, according to Betsy Chapman of the Maine Public Policy Institute, (http://www.maineinstitute.com) but a main reason is that Mainers are taxed too much and Maine government spends too much.

Chapman appeared last Sunday at a Tax Forum hosted by Gray citizen Gray Foster, and moderated by former Representative to the Maine Legislature and Gray's Democrat party chair Donnie Carroll.

The Maine Public Policy Institute's mission is to advance sound policies based on the principles of free enterprise, individual liberty, and limited constitutional government. Institute staff pursues this mission by conducting timely scholarly research on important state and local issues and then disseminating the findings to elected leaders, the media, business leaders, community organizations, and individual citizens.Left, Rep. Joe Bruno (R-Raymond), Gray Council Chair Pam Wilkinson listening to Chapman's recommendations. The Monument: Prata photo

About 31 people attended, including current Rep. Susan Austin, Senator Karl Turner, Rep. Joe Bruno, Cumberland County Commissioner Gary Plummer, Gray Republican chair Bill Getz, and House candidate for District 110 Donald Swander.

Chapman said that Maine's public policy over a long period of time has caused this slow economic growth. This finding is from a recent report, "Maine's Path to Fiscal Redemption," a power point presentation shown to the citizens gathered at Stimson Hall.

"There are three problems with Maine's fiscal policies. One is the level of spending in Maine. There is a structural gap between spending and revenues. The second is the need to reduce taxes, but the right one, the Income tax. And third, Maine needs to learn to discipline their spending at all levels of government." Chapman stressed that Maine's revenues are climbing, but spending continues to outstrip money that's brought in.

Maine has a higher poverty rate than low- taxed neighbors in New Hampshire. According to the United Way State of Caring Index released earlier this year, 10.6 percent of Mainers are in poverty vs. 7.7 percent of the people in New Hampshire. Not surprisingly, that personal income grew at a much slower rate in the 10 highest taxed states.

She recommended that Maine cut its income tax, a recommendation that surprised County Commissioner Gary Plummer. "We at the County level have focused for so long on property taxes and now the recommendation is to cut income tax. Aren't we just switching the level of the problem?" Plummer asked.

"I know the impact that the income tax has on choices people make with their money. In the 1990s, over 2,800,000Americans moved from the states that taxed income to the states that did not. There are no easy answers but there are some less worse directions to take than others Chapman said.

The flourishing in no income states such as Florida, Tennessee, Texas, Washington and others can be attributed to human and physical capital resources moving in to take advantage of the lower cost of public services. A high income tax states like Maine is losing because they do not provide public services at a competitive price.

Chapman said the MPPI's findings indicated that Maine would benefit from a Taxpayer's Bill of Rights, greater conformity with Federal Tax codes, a situation in which Maine is straying further every year, and rein in spending.
The presentation can be found at the Institute's home page, Maine institute.com and clicking on "Maine's Path To Fiscal Redemption."

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