Tuesday, August 4, 2009

MAINE'S NEW STATE INCOME TAX LAW - ROAD TO DESTRUCTION

The headlines from the State Legislature and Governor in Augusta focused on two primary issues: the rate is (in general) reduced from 8.5 percent to 6.5 percent of one's annual income and that the state sales tax is being spread to include more items and services than previously covered. The biggest uproar that resulted has been that car repairs are now going to be subject to a sales tax. Considering the abysmal state of the roads in this state, we all know how often and extensive our car repairs are annually, so we can see where this is going to hit our pocketbooks.

What our elected representatives didn't talk about very loudly was how this new state income tax law was going to impact people who owned or were buying properties.

If you are someone who itemizes tax deductions when preparing your state and federal tax forms, you know the two largest deductions are your mortgage interest and your property taxes. If you purchase property with a 30-year mortgage, your monthly mortgage payments for the first 10-15 years mostly goes to pay the mortgage interest. And we all know how our property taxes have been increasing to pay for school budgets and local government expenses. (And this will continue as the Maine state government continues to reduce its share of state education costs.) BUT, under the new Maine income tax law, neither your mortgage interest nor your property taxes will be deductible. Nor will any charitable donations.

According to a recent article in a local newspaper, those individuals making less than $60,000 annually will be paying MORE state taxes under this new Maine income tax law. Individuals making more than $250,000 annually will be paying FEWER taxes. And this law was passed by a legislature dominated by the Maine Democratic Party and signed by a governor from the same political party who is now claiming he has achieved his political promise to lower taxes in this state. Is he kidding?! Let us remember that the average annual income for Mainers is less than $45,000.

Under this new law, can you imagine anyone (who is aware of this tax structure) buying property in Maine either for the purpose of intending to be a Maine resident or bringing any operating business into Maine? If you are someone trying to sell any property in Maine, good luck finding a buyer unless that buyer doesn't have to finance any portion of the deal. And how many people do you think qualify for that?

Governor Baldacci was previously worried about the fact the state's population wasn't growing before this new tax law was passed. Guess how many people this will drive out of state or prevent from moving here in the first place! Which only decreases the tax base thereby increasing the state's tax problems and making matters even worse.

No wonder the Maine Democratic Party doesn't want to talk about these aspects of the new law. There is a rumor of petitions being circulated for signatures to put the issue on the ballot in November 2010 to repeal this law. Anyone seen one of them? If we can find one, we should be lining up to sign!

Of course November 2010 will be when we elect a new governor - and Baldacci will still leave office claiming he fulfilled his promise to lower state taxes. Instead he should be standing up to acknowledge how he (and his political party) have helped drive this state into perpetual poverty,

1 comment:

  1. Someone told me there are petitions for signatures at the Bangor Post Office. Seems the small towns like Eddington aren't on the distribution list for gathering signatures. Maybe we should make some noise with the people gathering signatures. For sure I'll sign!

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