Tax Reform 2013

357 posts / 0 new
Last post
Doug Thomas
Offline
Last seen: 4 years 9 months ago
Joined: 08/29/1999 - 12:01am
Tax Reform 2013

I know this is being discussed in another thread, but it's important enough to be a stand alone topic so people can find it easily. Please read and understand this proposed law. If passed it will have a very drastic effect on all of us. Here's a link to the bill.

I hate this bill first because I don't think our economy can stand 700 million dollars a year in new taxes. Most of all, I've always believed we need government, but it's not more important than the necessities of life like staying warm or food to eat. This bill raises government to our top priority. I'm not going to stand still and allow that to happen without a huge fight. I intend to win this fight... in order to do that I'm going to need lot's of help.

FLAMMENWERFER
Offline
Last seen: 2 years 2 months ago
Joined: 03/27/2005 - 1:01am
What we have here are

What we have here are contrasting "Pro-Growth" hopes. The Republicans involved in devising the bill are hoping that income and estate tax cuts will promote economic growth in the private sector. The Democrats hope the $700 million in additional revenue will help "grow" the government.

Melvin Udall
Offline
Last seen: 16 min 17 sec ago
Joined: 05/01/2002 - 12:01am
Doug: I read the bill last

Doug:

I read the bill last night; it's unbelievable. Hard to do here on AMG, but it deserves a paragraph by paragraph commentary.

The first thing I note is that every time it talks about doing something nice for me, I smell the same old lies that have always prevailed in the past.

It's about the spending first. And when you want to spend hundreds of millions more per year, all the smoke and mirrors of 'tax reform' and tax 'exporting' is just so much bravo sierra, intended to lull various interest groups into supporting the bill. Divide and conquer.

Melvin Udall
Offline
Last seen: 16 min 17 sec ago
Joined: 05/01/2002 - 12:01am
Quick note: any time squishy

Quick note: any time squishy words like 'fairness' appear in legislative documents, you need to be very concerned. And fairness appears multiple times in this document.

To get rid of the unfairness among individuals, you have to exercise power over them. The more fairness you want, the more power you need. Thus, all dreams of fairness become dreams of tyranny in the end. Andrew Klavan in a WSJ column

"Fairness" here, as in so many other contexts, means nothing more and nothing less than the exercise of arbitrary power by third parties, since everyone has a different definition of what "fairness" means. - Thomas Sowell

mainemom
Offline
Last seen: 4 hours 46 min ago
Joined: 03/09/2004 - 1:01am
Melvin, as has been discussed

Melvin, as has been discussed on another thread, we are simply not going to have a tax system in Maine that lacks a "progressive" structure.
Switching to a strict consumption tax (at the consumer level not the producer level) instead of an income tax is my ideal, but it will never happen because, fairness.
Now I see that it would be an uphill slog to try and convince the Doug Thomases of the world to support such a switch even if it could be done without the bow to fairness. It just seems so oppressive to have to pay a tax on every purchase of goods and services! Somehow this works in Texas, a state that I remind you is far more amicable to freedom than good old Maine, but it just seems so oppressive!

Texas, I acknowledge, does not have an income tax, so they lack a mechanism for addressing the fairness issue, except they do have a homestead exemption on their property taxes.

The gang of 11 tax reform bill keeps the income tax but drops the rate to 4% and uses it as a mechanism to achieve the fairness that Maine people require at all costs.

And please note that much of the rhetoric used to win support for the people's veto of the last tax reform was about how unfair it would be to make Granny pay a sales tax to her hairdresser. Those poor grannies in Texas! I bet they all cut their own hair and set their own perms.

Tom C
Online
Last seen: 10 min 56 sec ago
Joined: 01/03/2006 - 6:00pm
Melvin, as has been discussed

Melvin, as has been discussed on another thread, we are simply not going to have a tax system in Maine that lacks a "progressive" structure.

It has nothing to do with a progressive tax. The emphisis on the sales tax is regressive, not progressive, but the lefties will still push it all day long.

It's about raising more taxes. And you just can't raise more taxes by "taxing the rich". In order to increase revenues substantially, which is all the lefties care about, the need to raise taxes on the middle class, as well.

All the talk about "fairness" is empty talk, even from the left.

Watch what they do, not what they say.

It's about MORE taxes.

Islander
Offline
Last seen: 9 months 1 week ago
Joined: 02/13/2009 - 12:16pm
If it was about fairness then

If it was about fairness then there would be no carve outs or rebates for sales tax paid, homestead etc.

mainemom
Offline
Last seen: 4 hours 46 min ago
Joined: 03/09/2004 - 1:01am
Who believes revenue

Who believes revenue projections in Maine?
I sure don't - they're always wrong.
So I'm not accepting at face value the projections that this tax shift will increase revenue to the state and fund bigger government, all things static.
Its value to both public and private sectors is that it will be less of a drag on producers.

Now let's think for a moment about an individual Mainer with a specific goal. For the sake of the illustration I am going to ignore federal taxes including the payroll tax.

Sally is a young RN making a decent wage. Her goal is to save for a down payment on a house. Every dollar that is available to her for that purpose is now taxed at Maine's top marginal rate of 7.95%. (This assumes that the portion of her salary that is taxed at a lower rate is used up on necessities and bills.) Instead of $100 to set aside, she has $92.05.
Under the gang of 11 plan, instead of having $100 to set aside for her down payment, she would have $96.

Now let's say Sally has her eye on a pair of shoes (trust me she always does). The shoes cost $100 plus tax. What does Sally have to earn at the margin in order to buy the shoes?
Today's cost plus sales tax is $105. Sally's marginal rate is 7.95%. She would need to earn $114.07 in pre-tax wages to have the $105 in her pocket to buy the shoes.
Gang of 11's cost plus sales tax is $106. The income tax rate is 4%. Sally would need to earn $110.42 to buy the shoes.

Now you'll say fine but what about the portion of her wages that go to necessities and so forth? Take food - right now if she spends $100 on non-taxable food, she needs to earn something like $104.17. To get that same food basket under Gang of 11, she'd have to earn $104.17 plus $6, or $110.17. So there! Bad deal! Except: Under Gang of 11, when she does her income tax, she'll recoup the extra sales tax paid on food.

Sally shows how at the margin, the moderate or low income Mainer will have more disposable income to save or spend under gang of 11 than under current law. Combine this effect with the lower corporate tax, the repealed estate tax, and the flat 4% tax on "rich people" and small businesses, and it is evident to me that this tax shift has a pro-growth bias for the private sector.

Let the refutation begin, though. I know it's coming.

Melvin Udall
Offline
Last seen: 16 min 17 sec ago
Joined: 05/01/2002 - 12:01am
If there is only one thing

If there is only one thing you needed to know to frighten you about this bill, it is this:

Emily Cain is a co-sponsor.

This smacks of the game-playing in Washington, where Marco Rubio is being lured into joining with Chuck Schumer and Dick Durbin on the immigration front.

Any guess who wins when two wolves and a sheep vote on what to have for dinner?

J. McKane
Offline
Last seen: 3 years 10 months ago
Joined: 05/22/2005 - 12:01am
The gang of 11 tax reform

The gang of 11 tax reform bill keeps the income tax but drops the rate to 4%

But they remove exemptions - which means this is not the cut it pretends to be. Get rid of the income tax altogether and I'll be with you on the consumption tax.

This bill is about bailing out Dems and raising more money. The change in the income tax rate is token at best but it does the job of getting Rs on board.

Naran
Offline
Last seen: 4 years 11 months ago
Joined: 10/06/2004 - 12:01am
Senator Doug Thomas -- God

Senator Doug Thomas -- God bless you, for tackling this issue, and for all you do on behalf of Maine residents.

I agree with you, 100%.

Please keep telling the truth.

mainemom
Offline
Last seen: 4 hours 46 min ago
Joined: 03/09/2004 - 1:01am
J. McKane, What effect does

J. McKane,
What effect does the elimination of the personal exemption and standard deduction have on Sally's tax obligation?
Let's say Sally earns $20,000 more than the threshhold at which today's top rate of 7.95% kicks in.
Under current law she gets to reduce that by the exemption of $2850 and the standard deduction of $5950, meaning she will be taxed at 7.95% on $11,200 instead of $20,000. That's a $890.40 tax obligation on her last $20,000 earned.
Under Gang of 11, she'll be taxed at 4% on all of the last $20,000 she earns. That's $800.

Note that Sally's buy-shoes/save-for-a-house decisions apply to the last segment of dollars she earns, where the tax rate difference is maximized.
This is why tax plans are analyzed at the margins.

The scheme from 2009 did not drop the rate enough to make it worth doing. This is not the 2009 plan.

Naran
Offline
Last seen: 4 years 11 months ago
Joined: 10/06/2004 - 12:01am
2:33 PM Norquist: Maine's

2:33 PM
Norquist: Maine's 'Gang of 11' tax reform violates no-tax pledge

By Steve Mistler smistler@pressherald.com
State House Bureau

AUGUSTA — .... snip

....Norquist said ....proposal ....a $700 million tax hike. ....voting for...plan would....violate ....Americans for Tax Reform no-tax pledge.

....snip
"Tax reform must be revenue neutral," he wrote. "A vote in favor of this legislation, as written, is a violation of the Taxpayer Protection Pledge. If the goal of the legislature is to reform the tax code and make the state more attractive to job creators, that goal should be accomplished without increasing the state’s overall tax burden."

Norquist Says "No Sale."

----------------------

Norquist's Letter -- PDF File

Thrasybulus
Offline
Last seen: 2 years 3 months ago
Joined: 03/16/2008 - 9:59pm
If the average legislator was

If the average legislator was as smart as mainemom, the system could survive another 25 years.

Since the average legislator is less than half as smart as mainemom, I'd say we will be lucky to last 5 more years.

IQ is incremental, like the Richter scale for earthquakes. A person with a 140 IQ, like Economike, is not 40% smarter than a person with a 100 IQ. He is 10 times smarter. In fact, a person with a 140 IQ is smarter than a 100 IQ person to the same degree that a person with a 100 IQ is - to an orangutan. Can an orangutan open the fridge, feed itself, watch television, even perform small chores? Sure - but it doesn't know what your 401k is.

Plenty of interesting factors to discuss with this proposal, but precious little of it being discussed here. Our lunatic political system, based on the absolute falsehood of egalitarianism, puts the orangutans in charge. Good luck with that:-)

Melvin Udall
Offline
Last seen: 16 min 17 sec ago
Joined: 05/01/2002 - 12:01am
A friend passed along a copy

A friend passed along a copy of the document you can find here:

OFPR Fiscal Newsletter

It will give you a good foundation in revenues and expenditures from which to think further on this tax bill proposal. Be sure to check it out. It comes out once a month.

On a different note, do any of you know what ProMix is? I'm potting up a bunch of tomato plants, and using ProMix as the potting medium.

You're supposed to wet the stuff first, before you fill the pot.

So I dumped a bunch in my wheelbarrow, and applied two two gallon watering cans full of water to it. Took the shovel and went to turn it over, and it was as if I had added almost nothing. It took three more significant amounts from the hose to get it 'moist.' The stuff absorbs an incredible amount of water, and then you plant your plant, park it in the sun, and a few days later, it cries out for more water. No amount ever seems to be enough.

I'm thinking of Maine Government (and all the rest) as ProMix equivalents. They can absorb more money than you believe possible, and just when you think you've given them more than enough, they scream out that they need more.

It's like they have a money evaporating facility somewhere in Augusta.

Naran
Offline
Last seen: 4 years 11 months ago
Joined: 10/06/2004 - 12:01am
Yep. "Big Government --

Yep.

"Big Government -- Spending Money Faster than Water Evaporating on Your Black Top."

****************

Note -- the Gang of 11 plan would make Social Security payments taxable.
Isn't that swell?

------------------------

Jake Mulligan wrote:

This bill hits seniors hard by making their social security subject to Maine Income Tax.

Naran
Offline
Last seen: 4 years 11 months ago
Joined: 10/06/2004 - 12:01am
Maine legislators vote for

Maine legislators vote for higher sales tax

By Matthew Stone, BDN Staff
Posted May 03, 2013, at 4:34 p.m.

AUGUSTA, Maine — .... committee....voted along party lines to raise Maine’s sales tax to 6 percent starting in October if ...revenue sharing payments to towns and cities ....fall short of the level prescribed in state law. ...Taxation Committee also moved closer to raising income taxes on those earning more than $100,000.

...committee voted 8-3 to support LD 1141, sponsored by Rep. Charles Theriault, D-Madawaska, with Republicans opposing the move....bill would raise the state’s 5 percent sales tax to 6 percent whenever ....revenue sharing payments to municipalities fall short of ....5 percent of state income and sales tax revenue prescribed in state law.

More Money Always from Maine's 1%

Islander
Offline
Last seen: 9 months 1 week ago
Joined: 02/13/2009 - 12:16pm
Mianemom, why do you believe

Mianemom, why do you believe they will not raise the income tax in the very near future. Progressives love incremental-ism, 4% now 5% later. And if the state can afford to give Sally a reduction on her taxes for sales tax paid, why collect the sales tax in the first place, oh I get it they just want to seem fair, when in reality they punish the successful. Isn't class warfare great.
Do away with the income tax, go to a consumption tax and no rebates for anyone, that is fair.

Naran
Offline
Last seen: 4 years 11 months ago
Joined: 10/06/2004 - 12:01am
Maine House Republicans

Maine House Republicans wrote:
After rejecting many sensible savings initiatives in the Governor's budget, Democrats are now trying to pay for their overspending by raiding the pockets of Maine families.

Doug Thomas
Offline
Last seen: 4 years 9 months ago
Joined: 08/29/1999 - 12:01am
If this bill was to eliminate

If this bill was to eliminate the Income tax and were revenue neutral I would have to think about it as much as I hate the idea of making government equal to our need for food and shelter. In my world its GOD, Family, and Country.

This bill is tax and spend at it's worst. Even though the Legislature knows working Mainer's are being forced to cut back in this economy we are unwilling make the hard choices we know need to be made. Taxpayers need to know next time government needs more money the income tax will be first on the list if we don't eliminate it altogether.

Until we break the tax and spend cycle we can only watch the Maine economy decline. If we want real tax cuts those will only come after real spending cuts and not hocus pocus.

Naran
Offline
Last seen: 4 years 11 months ago
Joined: 10/06/2004 - 12:01am
Amen. Thank you, for holding

Amen.

Thank you, for holding the line, and telling the truth on this proposal.

Melvin Udall
Offline
Last seen: 16 min 17 sec ago
Joined: 05/01/2002 - 12:01am
"Hocus Pocus." Isn't that a

"Hocus Pocus."

Isn't that a little township, just up the road from Fammington, where Top Flammen resides?

Thrasybulus
Offline
Last seen: 2 years 3 months ago
Joined: 03/16/2008 - 9:59pm
"bill would raise the state’s

"bill would raise the state’s 5 percent sales tax to 6 percent whenever "

So were are going to get the 6% sales tax WITHOUT the income tax cut? Yummy.

I note the elderly lobby already disgruntled by the tax on income (social security is income, ya know?), however low. The wealthiest segment of our economy always has a good reason to pay less, so others can pay more:-)

Lance Harvell
Offline
Last seen: 4 years 10 months ago
Joined: 01/17/2010 - 6:26pm
Doug this is not a 700

Doug this is not a 700 million dollar tax increase and you know that. The one person who seems to actually understand this is maine mom. This is the same approach being tried by republicans like Jindal in La and North Carolina, Ohio and other places. And as to growing government when conservatives unleash the economic forces of the private sector they always will raise more revenue for the government that is a bi product of growth. If you are a starve the government only person you belong in a party of anti growth. In the late 1970s you would not have wanted to vote for Reagan or Thatcher because their progrowth tax policies doubled government revenue. This tax bill does not deal with how that is spent it is not a mechanism to do that. That is a debate for what do do with the millions of new revenue at will pour in due to economic growth.

Jeffersonian
Offline
Last seen: 2 years 1 week ago
Joined: 11/27/2007 - 8:35am
Melvin Udall has the GOP

Melvin Udall has the GOP politics on this disastrous bait and switch tax increase exactly right The Gang of 11 in Augusta on State "tax reform" is just like the Gang of Eight on "Immigration Reform" in DC aka as Amnesty for about 33 million New Democrat voters who lllegally invaded America's borders.

Sen Roger Katz and Rep Dennis Kesch are playing the roles of clueless Republicans RINOs for the benefit of Emily Cain and her dishonest band of big spenders just like McCain and Rubio play the dunces to more saavy Democrats like Schumer and Durbin in Washington DC who are making sure the GOP never wins another nation wide election.

Katz ,Keschl and Co. turned out to be Bob Dole like tax collectors for The Maine Democrats massive welfare state instead of spending cutters on Maine's bloated bureaucracy and unsustainable entitlement programs. We now know who are the wolves and who the sheepdogs. We should vote accordingly.

Stay strong Sen Thomas. Maine has a spending problem, not a revenue problem. The proposed "tax reform" is just another money grab by vote buying politicians who would rather be lauded by the spenders and their media cheerleaders than protect the taxpayers. The only "growth" that will be seen will be in the amount of State spending. Kill it or sustain the LePage veto.

Lance Harvell
Offline
Last seen: 4 years 10 months ago
Joined: 01/17/2010 - 6:26pm
Jeffersonian. Can you tell me

Jeffersonian. Can you tell me exactly how taxing groceries is a vote buying scheme? The tax code in this country is so outdated and complicated because it has been the playground for politicians for over half a century. It makes no sense and does need major reform. And btw what is your answer to the fact that one will always take the risk of more revenue to the government if the unleash the private sectors economic potential? And where in history has this not Ben the case?

mainemom
Offline
Last seen: 4 hours 46 min ago
Joined: 03/09/2004 - 1:01am
Senator Thomas, it's your

Senator Thomas, it's your thread. I would love to see your concrete plans to reduce state spending and limit the size and scope of government. You can omit cutting revenue sharing, we know that is not going to do either thing.
Thank you.

Rep. Harvell's comment about the $700 million is important. That's the additional sales tax revenue in this bill, but it is used to "pay for" the reductions in the other taxes. It is not in addition to status quo revenues.

As for taxing Social Security, the bill would tax Social Security benefits taxable at federal level.
Changes such as this are what you get when you demand simplification of the tax code.
You can't say, "simplify the tax code," and then cry about it when the code is simplified.

But the plan will also have a tax credit for seniors of up to $1,500 with up to $600 of that refundable, meaning the seniors who are harmed by the net changes in the income and sales tax will get money back from the state. On top of that, they get a property tax credit: The property tax fairness credit refunds to taxpayers half of the amount by which property taxes exceed 6 percent of income, up to a maximum refund of $1000 per household. This is after the $50,000 homestead exemption which reduces the value to which the tax can be applied.

Finally the ultimate question: why do I "believe" a future legislature won't just raise the income tax rate from 4% up to something else or introduce a higher bracket or some other vicious thing that would destroy the good effects of this reform?

Never said I believe that. The Seth Berry types, that is, the "fair share" mob, the MECEP advisees, and the Maine Peoples Alliance drones, will always try to achieve such destruction. Their task will be more difficult if this bill passes with broad support both in the legislature and among the public. The latter is very difficult because it so easy for the demagogues to focus on certain sentences in the bill to build a negative narrative against it, a narrative that does not reflect the positive reality of what the bill could do for Maine people. We already see that happening here among the relatively tuned-in folks at AMG.

But guess what. We have the fair share mob anyway. They want to increase taxes now, without any pro-growth provisions to help our economy take off. We can render them irrelevant by shooing them aside and turning to the path of growth.

Or not.

Lance Harvell
Offline
Last seen: 4 years 10 months ago
Joined: 01/17/2010 - 6:26pm
This bill actually cuts

This bill actually cuts welfare if you think about it you will understand. And as to seniors having to pay tax since when should the generation that voted to put all these policies and programs into existence be exempted when the bill comes due? Do we all actually hate the youth that much? And Doug this bill is an overall tax cut.

Lance Harvell
Offline
Last seen: 4 years 10 months ago
Joined: 01/17/2010 - 6:26pm
Doug I share your passion it

Doug I share your passion it is an issue I have had to deal with all my life and passionate people like ourselves often act and speak before we think. I am reminded of your passion last year on the east/west highway. You were for it and how could any conservative be against it? But where stand you now?

Lance Harvell
Offline
Last seen: 4 years 10 months ago
Joined: 01/17/2010 - 6:26pm
Maine mom it is a pleasure to

Maine mom it is a pleasure to see you discuss this. The fact is correct there are no guarantees on any future plans. I know not who will be there I can only put pro growth policies on place and hope the money they bring in is wisely, or rather not badly spent. Though history tells me that democrats or republicans are humans first and their wanting s as Schopenaeur wrote never end. And that expenses always rise to revenue levels.

Lance Harvell
Offline
Last seen: 4 years 10 months ago
Joined: 01/17/2010 - 6:26pm
Also Mine does not allow

Also Mine does not allow dynamic fiscal notes on bills. And we are not the federal government. If we were we may be able to get a dynamic fiscal analysis on this bill and we would likely learn the revenue projections based on a 4 percent income tax. At the federal level you could just make that cut and cover the loss though borrowing until it kicked in, Though as we know that has a downside, but states have to balance the budgets so no such option is available.

Pages

Log in to post comments