Taxes are not sexy. Despite this shortcoming, they are a hot topic, both nationally and at state level. Let’s use Maine as an example.
In the most recent Maine election, and in the elections of two other states, a “people’s” initiative called Taxpayer Bill of Rights (TABOR) was narrowly defeated. It would have imposed limits on the growth of government by requiring increases in overall tax revenue be tied to inflation and population increases. http://en.wikipedia.org/wiki/Taxpayer_Bill_of_Rights
According to the Tax Foundation http://www.taxfoundation.org/research/topic/32.html
Tax Freedom Day is April 26 each year, meaning the average U.S. taxpayer works until April 26 and all of the wages to that point are collected for tax payments. In Maine the date is May 1, making Maine taxpayers the 7th highest taxed in the nation. Other statistics from the Tax Foundation are also troubling for Maine.
Here are some basic facts on Maine’s tax system and how it compares to other states:
Tax Freedom Day Arrived on May 1st in MaineMaine ranked 7th highest nationally as set forth above.
Maine’s State/Local Tax Burden Highest in NationMaine’s state/local tax percentage of over 13% has ranked Maine as the highest in the nation for the last 10 years.
Maine’s 2007 Business Tax Climate Ranks 42nd
Maine ranks 42nd in the Tax Foundation's State Business Tax Climate Index. New Hampshire, Maine’s immediate neighbor to the south, ranks an envious 7th, one of the lowest rankings in New England.
Maine’s Corporate Income Tax SystemCompared to other areas of Maine’s tax system, Maine does a little better in the corporate area. It ranks 11th highest in tax rates and 25th in per capita tax.
Maine imposes Sales Tax at the national average, but Cigarette and Gasoline Taxes are among the Highest in the United States.Maine has taken steps to address its high number of cigarette smokers including imposing a $2.00 per pack cigarette tax, making it the 4th highest in the nation. Maine’s gasoline tax is also high putting it in the top 15 highest in the nation. It is not certain if the high gasoline tax is a policy issue (conservation, cleaner fuels) or a necessary fee because of transportation and associated costs.
Maine Property Taxes among Nation’s HighestMaine is 6th nationally in property taxes at the local (municipal or county level). This concern was the major reason for the TABOR debate that occurred in Maine and other states during the 2006 election. It remains an ongoing and thorny issue to be resolved.
The problem of excessive taxation, which has the potential to stagnate economic development, is one that many states now face. The above information, highlighting Maine, is meant to provide an example of the problem. You can check out where your state ranks on these matters by going to the Tax Foundation website (www.taxfoundation.org).
Now that the problem has been set out in detailed fashion, the next step is to craft appropriate policy solutions. The Joint Committee on Taxation for the Maine’s 123rd Legislature has begun just such a process. More details will be discussed in subsequent articles. All options are on the table, which is the suggested approach in other states. It is hoped that solutions crafted in Maine can be used in other states suffering from an excessive tax burden.
