Tax System: What Are Maine People Looking For?

Courier-Gazette
12/4/04
Editorial: People are watching
What are the people of Maine looking for?It is crystal clear that Mainers want a system of taxation that is spread across a broader spectrum - stop using the property tax as a primary funding mechanism. Despite the fact that people have been saying this for a long time, the issue didn't land on the front burner for our politicians until this past year when the petition-driven tax cap vote scared the dickens out of state and local leaders across much of Maine.The governor has unveiled a plan that contains a number of proposals aimed at reducing the property tax burden as well as getting the state's share of public education funding up to 55 percent by the 2007 state budget. The reality is that no matter what Gov. Baldacci proposes, it will be up to the Legislature to hammer out the details and craft the road map for tax reform.Full Story

The sad fact is that property taxes are not the number 1 evil. It is the income tax that is holding Maine people back. And, with the Democrats in control, look for the legislature to apply precisely the WRONG fix.

And the spending will go up as will the taxes. They will just take the tax money from another of our pockets.
Bud

quote:It is crystal clear that Mainers want a system of taxation that is spread across a broader spectrum - stop using the property tax as a primary funding mechanism.

I don't know about everyone else, but this opening premise, at a personal level, is entirely wrong, so I read it as an attempt by the media and general big government supporters to make nice while preserving precious and "vital" programs and their unconstrained growth.I want lower spending, which will naturally lower taxes. Then you constrain the rate of growth of spending, and you bring predictability to your financial future. As I've told many, there are two serious problems with property taxes. First, the absolute level. Second, and perhaps even worse, is the complete lack of any restraint; each year the tax rate is set anew depending on what they feel like doing. I believe that without citizen pressure, we'd see annual increases of about 10% on average.Characterizing the situation as they have done hear is the party line talking points coming out of Augusta. We just want things rearranged, they say. They always want to spend more, and will do anything to make sure they can, I say.Here's the way Augusta sees things. It's like you're in the supermarket and your cart is getting too heavy to push. They think if you take those heavy gallons of milk, and your 12 packs of Bud, and put them on the grid below the basket, your cart will be easier to push.Why can't anyone get the message?

Taxation is not the fundamental problem. SPENDING is the problem. Augusta has so much money that they are out buying up large tracts of land just to find a way to spend it all.

You are correct. Spending is the major problem at all levels of Maine government. Income taxes are the worst of the taxes in terms of economic development retardation.

There has to be a fairer way to tax so that those who want expensive care and services fund it thenselves without nailing those who are happy with a simple existence.Examples are: why should I who raised only two kids be paying for the expensive education of those who have a half dozen. And why should retirees living on afixed income be taxed out of their homes by the huge education costs. Put those education costs on the parents who are spitting out the kids by a use tax on schools. Many people have kids for no other purpose than ego or because the Joneses did. Couples have children then divorce and expect the schools to replace the missing parent with expensive programs and special ed because little Johnny can't cope w/o his dad. Is there no self control, respect or will anymore? It is not right to expect others to pay for your mistakes, deal with them yourself and pay your own piper.

quote:Originally posted by Gaffer:
It is not right to expect others to pay for your mistakes, deal with them yourself and pay your own piper.

That's right! But you left some items off your list: How about by giving those on Social Security only what they would have earned on their contributions in an average earning mutual fund and nothing more? And we can have the elderly pay the full cost of their health care.

quote: What are the people of Maine looking for?

A tax on consumption, not income.

Taxes are high in Maine regardless of where they are raised!Spending needs to be cut. No other way to solve the state's problems.

quote:Originally posted by George:
That's right! But you left some items off your list: How about by giving those on Social Security only what they would have earned on their contributions in an average earning mutual fund and nothing more? And we can have the elderly pay the full cost of their health care.

George, I'm getting around a 1% on my 52 years of Social Security payments. What percentage return do you reckon I should be getting?As I'm still working I continue to "pay into" Medicare (and Social Security, for that matter)... but I doubt that I'll pay in as much to Medicare as I'll get out... unfortunately.Regardless, I think everyone is SPOT ON with the property tax... given its evolution, the historical exclusion of one's residence, etc... all argue for a major revolution."A man's home is his castle." Right! At least it's gonna' be taxed as though you're a king and it's a castle! :eek:

The Maine Department of Education staff was mostly funded on Federal lines for a long time, and probably still is. Many people wear two hats...one for the federal grant or contract and one for the Department; they jump jobs as the grants come and go. Figuring what any does and for whom is like untangling a bowl of spaghetti!There is a synergistic impact of so much federal involvement in State education that drives up the cost of local schooling, since the federal grants usually lay the groundwork for some new program thrust that drives up the cost of schools.A moritorium on federal funding of education by MDOE would eliminate all these 'voices' for change in the department, and reduce the presure to constantly expand program areas.
...won't ever happen, but perhaps Congress should hear this message.

quote:Originally posted by billPhillips:
George, I'm getting around a 1% on my 52 years of Social Security payments. What percentage return do you reckon I should be getting?

Your experience is not typical. You likely paid in the maximum contribution for the last several years and also worked many years since the big tax increases in the 80's. Anyone who worked only a few years after FICA taxes skyrocketed got back more than would have been earned from their contributions. Also, those on the lower end of the income scale get a better return than those on the top.

quote:Originally posted by billPhillips:
As I'm still working I continue to "pay into" Medicare (and Social Security, for that matter)... but I doubt that I'll pay in as much to Medicare as I'll get out... unfortunately.

That's right -- no insurance company would give you health care when you were over 65 for 1.45% of your income.My point is if we are going to talk about paying for what you get -- we need to look at the whole picture. The elderly are big takers, too. Gaffer left any of the programs that benefit them off his list. Why? I can guess.

I belive that Tenn has a tax policy that once you reach the age of 50 and if you no longer have children in school you do not pay that part of your tax bill that is applied to education. Seems fair to me. It would make the people with children in school think about the cost of education and help out the elderly with their property tax bills.

quote:Originally posted by BnB:
I belive that Tenn has a tax policy that once you reach the age of 50 and if you no longer have children in school you do not pay that part of your tax bill that is applied to education. Seems fair to me. It would make the people with children in school think about the cost of education and help out the elderly with their property tax bills.

It would only be fair if I could also opt out of paying taxes for programs that benefit the elderly. I would love to get out of the Social Security system.[ 12-05-2004: Message edited by: George ]

quote:Originally posted by Bob Stone:
The sad fact is that property taxes are not the number 1 evil. It is the income tax that is holding Maine people back. And, with the Democrats in control, look for the legislature to apply precisely the WRONG fix.

Get rid of the income tax, implement a consumption tax. Stop penalizing those that earn a great deal of money for making it!!! Leave our income for us to decide how it should be spent. And when we finally decide to spend it, if we purchase a car, get us with a FAIR sales tax.

I don't know a lot about taxes other than I pay them like everybody else. But one thing that seems funny to me is when this whole tax cap thing came up. How come the people against it pushed cuts in fire, police and ambulance???Nobody ever mentions the pork barrel stuff that could be cut. They throw fear in the eyes of taxpayers by right away cutting their services. I am sure there are ways if you really look into it like putting office supplies for government out to bid. Hire subcontactors to do certain jobs instead of hiring full time state employees. Maybe these things are already being done but how come public services are always threatened to be cut first when we are the ones paying for the public service???

How many people in Maine understand that government spending is out of control and it is ruining the Maine economy?Have the loyal oppositition party leaders educated the public as to the actual problem, or has effective communication been severely lacking?Unfortunately, Republican politicians are not serious about cutting spending to the degree that it will do any good.One leader told me that he was uncomfortable with giving taxpayers the final say on big tax increases ala TABOR.It's kind of like term limits. They're probably not the best thing to do when considering our freedom to choose whomever we damn well please to represent us, but the power that we have given our government is so overwhelming that incumbents are able to curry enough favors to be nearly invincible when running for re election.Legislators may not like strict limits on the growth of spending. They may not like to have to toss big increases back to their constituents for approval. But, they sure do deserve such limits. They have proven that they cannot do the job on their own.Unfortunately, the governor and the chamber of commerce plan have succeeded, it seems, in drawing attention from the TABOR initiative, which, I believe, is the best chance Mainers have to begin the process that will lead to a law first, and then a constitutional ammendment to limit spending.Republicans need to get on the stick to get TABOR on the ballot for 2005. Otherwise we'll find just a lot more of the same in Augusta.

Tom Fales,
I think a tax on consumption is a great idea, especially when coupled with a spending cap.

Why not inact users fees, instead of broad based taxes across the board. Use the "yellow-page" approach as well. If private business delivers the same services as the government, government should bow out.Education would be a great start!!!!

quote:George, I'm getting around a 1% on my 52 years of Social Security payments. What percentage return do you reckon I should be getting?

How do you know? Did you base that on actuarial tables? Have you taken account of the automatic COLA?

Randy...Returns are calculated for each congressional district. They run around 1% in Maine's. Since the "trust fund" is spent and NOT invested (unlike the public employee unions), the return is meager. I'll see if I can find a source for you.All the "trust fund" is are a bunch of IOU's, stating that future Congresses will pay it back. Nothing more than a promise totally dependent on the good will of future lawmakers. Nice feeling, isn't it?Bob

quote: Randy...
Returns are calculated for each congressional district. They run around 1% in Maine's. Since the "trust fund" is spent and NOT invested (unlike the public employee unions), the return is meager. I'll see if I can find a source for you.All the "trust fund" is are a bunch of IOU's, stating that future Congresses will pay it back. Nothing more than a promise totally dependent on the good will of future lawmakers. Nice feeling, isn't it?Bob

With all respect Bob, I know all about the scam that is SS. Refer to my previous posts.My point is that you can't calculate a ROI without making assumptions about future payments. That includes not only how long you will live, but the effect of escalators like the COLA. Using "blended" ROI numbers like you are quoting is bogus. I agree that the younger you are, the worse your ROI is going to be. But those that are already retired are likely to see much better than 1% ROI if they live to thier full life expectancy (which is still rising BTW).

For the benefit of George and others that think that we retirees are stealing, let me say the following. If I had been able to take the money that was set aside for SS, both my direct deductions and those made in my behalf by my employer for the nearly 50 years that I worked and invested them in my 401, IRA's or other tax free accounts I would have been farther ahead. As it was, I managed to save considerable amounts, but less than what Uncle Sam was getting from me, in 401's and IRA's and it does better than SS now. Can I afford the high property taxes, yes for now, but all my benefits are locked in at 1990 amounts and as time goes on the increases for healthcare etc far outgrows my ability to pay. My retirement is 50% of what my working income was and coupled with the inflationary trend of all else that we use to survive our future is not all that bright. If one considers the rising cost of fuel, gasoline, food, healthcare, taxes and all else that one uses to survive but are on a fixed income the rubber meets the road rather quickly.Am I fortunate, yes! Much more so than others, because I did without years ago to put away for the future but it gripes the hell out of me to have the likes of those like George to keep bitching that we are getting something which we don't deserve. We did not ask to be a part of SS but we were obligated to pay into it. Therefore I don't feel bad to take from it. It was a contract that I was forced to enter into and they damn well better pay me what they promised to. I also hope I live to be 114 years old so I get every dime I deserve and some of what George has paid in.

quote:Originally posted by Gaffer:
Am I fortunate, yes! Much more so than others, because I did without years ago to put away for the future but it gripes the hell out of me to have the likes of those like George to keep bitching that we are getting something which we don't deserve. We did not ask to be a part of SS but we were obligated to pay into it. Therefore I don't feel bad to take from it. It was a contract that I was forced to enter into and they damn well better pay me what they promised to. I also hope I live to be 114 years old so I get every dime I deserve and some of what George has paid in.

My father is in exactly your position. He too worked hard, for over sixty years, and paid in every dime required of him. He started work in a bakery at age 14, and put himself through engineering college. He's now 75, and I'm glad he's getting some support in his old age. I'm sure the same SS benefits won't be there for me, despite my having paid in for over 25 years now. I don't expect to get much back from SS. But I don't begrudge you or anyone else one nickel. I just wish those in control of the money had safeguarded it more carefully, instead of using it as the national piggy bank, to be raided at will.[ 12-06-2004: Message edited by: Naran ]

quote:Originally posted by Bob Stone:
You are correct. Spending is the major problem at all levels of Maine government. Income taxes are the worst of the taxes in terms of economic development retardation.

You are probably right on economic development BUT, the most odious tax to the average tax payer is the one based on imaginary wealth, the one that forces people from their homes. ;)

quote:Originally posted by Gaffer:
now. Can I afford the high property taxes, yes for now, but all my benefits are locked in at 1990 amounts and as time goes on the increases for healthcare etc far outgrows my ability to pay. My retirement is 50% of what my working income was and coupled with the inflationary trend of all else that we use to survive our future is not all that bright. If one considers the rising cost of fuel, gasoline, food, healthcare, taxes and all else that one uses to survive but are on a fixed income the rubber meets the road rather quickly.Am I fortunate, yes! Much more so than others, because I did without years ago to put away for the future but it gripes the hell out of me to have the likes of those like George to keep bitching that we are getting something which we don't deserve. We did not ask to be a part of SS but we were obligated to pay into it. Therefore I don't feel bad to take from it. It was a contract that I was forced to enter into and they damn well better pay me what they promised to. I also hope I live to be 114 years old so I get every dime I deserve and some of what George has paid in.

Gaffer,
I don't necessarily begrudge you anything BUT more than likely you will get all of Georges and my So. Sec. contributions and we will see none of them. Your statements are entirely self serving and I don't blame you, but think for a minute about those of us in our early 40's and late thirties the way things are shaping up now we will find ourselves in much worse shape than you are today, largely because the AARP is one of the strongest lobbies out there, and they are lobbying for more, more, more and getting it. The same time this is happening education wants and gets more, more, more andmy generation is going to foot the bill for all, all, all.

Brings to mind the "I'm spending my childrens inheritance" bumper stickers, you bet your sweet bippy you are and in more ways than one. My generation will eventually have to deal with all the cuts in services or all the tax increases to pay for the services your generation enjoyed and expanded.[ 12-06-2004: Message edited by: Keenan ]

The point is Keenan that did not vote for Ss or for the guy who implemented it all. I was forced by the government to participate in it, therefore now that I am in my seventies I take from it, and rightfully so. You are paying into it and everyone of you in the working world should expect to get SS as well. If that is projected not to happen then why in the hell don't you do something about it.

quote: also hope I live to be 114 years old so I get every dime I deserve and some of what George has paid in.

The thing that you don't seem to realize is that the FIRST $1 you recieved from Social Security was due to someone elses taxes, not your own contributions. Your contributions were gone the minute you paid the taxes. So you have been getting somebody elses contributions for years.As I recall, you are in your 70's. There is no reasonable way that you could have earned a return on your and your companies matching contribution that matches what Social Security will pay out over your expected life. To say otherwise is just not true. This is part of the problem with any attempt to fix the system.Nobody likes the idea of cutting the benefits of current retiree's, but they have no problem with cutting mine, by raising the retirement age or increasing taxes. It's as if they hope those of us that are younger won't notice that were screwed 'til it's too late, and by that time those that ran off the the money will be dead.I think a little honesty about what the system is and needs to become would go a long way. It needs to start with the leaders putting out the truth about Social Security, where the money comes from and where it goes instead of trying to placate the 60+ and under 45 crowd at the same time they are picking the pockets of the 45-50 crowd.

quote:Originally posted by Gaffer:
The point is Keenan that did not vote for Ss or for the guy who implemented it all. I was forced by the government to participate in it, therefore now that I am in my seventies I take from it, and rightfully so. You are paying into it and everyone of you in the working world should expect to get SS as well. If that is projected not to happen then why in the hell don't you do something about it.

You want to cut education spending so that you have more money in your pocket. Why can't I say that I want you to take less So. Sec. so that I have more money in my pocket.