Raise taxes on Maine's wealthy? Some of them are OK with that

Yahoo

26-03-2025

Mar. 26—Libby Delucia-Harting traveled from her home in Portland to the State House in Augusta on Wednesday with an unusual request for lawmakers.
"I want to talk about my wealth to highlight the importance of taxing people like me," Delucia-Harting said, telling lawmakers that she inherited wealth accumulated by her great-grandfather and protected through generations by using tax loopholes.
Delucia-Harting was among a group of wealthy residents and progressive advocates who testified in support of two bills to increase taxes on millionaires and those whose wealth earns them more wealth — a move that could generate more than $200 million a year at a time when state officials are considering budget cuts and deficits in the state's Medicaid program.
Proponents say that increasing taxes on Maine's wealthiest residents would help protect important investments in education, child care and health care, while opponents argue it would only cause wealthy residents and businesses to leave the state or not come here at all.
A bill sponsored by Rep. Grayson Lookner, D-Portland, would add a 4% tax on capital gains — profits from selling assets such as real estate, businesses or stocks — in excess of $250,000 for a single filer or $500,000 for a married couple. The capital gains tax would be in addition to the state income tax.
And Rep. Cheryl Golek, D-Harpswell, sponsored a bill, LD 1089, that would add a 4% surcharge on any taxable income in excess of $1 million a year and use that additional revenue to maintain the state's commitment to provide 55% of public school funding. Currently, the highest income tax rate of 7.15% kicks in for a single person's earnings of more than $63,450.
If enacted, the top effective rate would rise to 11.15% of incomes in excess of $1 million.
The bills are among several targeting the state's income tax system.
Rep. Laurie Osher, D-Orono, has a bill that would increase tax rates for higher earners, setting a rate of 8.15% on income between $100,000 and $200,000, 9.15% for income between $200,000 and $300,000 and 10.5% for income over $300,000.
Meanwhile, Rep. David Boyer, R-Poland, has proposed a bill to phase out the state income tax.
Lookner told members of the Taxation Committee that the current tax system "rewards wealth over work," and working people like nurses have higher tax burdens than wealthy stock market investors.
"The stark reality is that our current tax system is upside down," Lookner said. "This isn't by accident. It's the result of decades of tax policies that favor capital over labor, that privileges passive income over wages."
Lookner's bill, LD 1047, could bring in an estimated $55 million a year, while Golek's bill could generate $200 million a year, according to Maine Revenue Services.
"We must remember that those who benefit the most only do so because of the hard work and needs of those who benefit the least," Golek said. "The bill before you today simply asks for our richest to share a slice of bread with those who turned the dough and made the loaf for them to eat. Our economy should not be balanced on the back of the working class."
Four states, including Massachusetts and New York, have "millionaires taxes," or higher tax rates on incomes over $1 million, according to the Tax Foundation.
The bills heard Wednesday were supported by a broad range of advocacy groups, including the Maine Women's Lobby, Maine Equal Justice, Maine Center for Economic Policy and local unions. It was opposed by Gov. Janet Mills' administration, Republicans and associations representing local businesses, realtors and the hospitality industry.
"Maine is already a high tax state," said Linda Caprara, vice president of advocacy for the Maine State Chamber of Commerce. "We believe this type of legislation will force migration out of the state of Maine. If folks are looking for revenue, then grow the economy and grow jobs. Lower taxes attract more folks here."
Mills, a Democrat, has already said she does not support any broad-based tax increases, saying in her state of the budget address that businesses need certainty and predictability. And last session, she vetoed a bill that would have restructured the state's income tax brackets, saying the bill didn't get a thorough hearing and would do little to provide tax relief to those who need it most.
Michael Allen, the Mills administration's associate commissioner of tax policy, opposed both proposals to raise taxes on wealthier residents, citing a recent study from the Institute for Taxation and Economic Policy that shows Maine has one of the most progressive income tax structures in the country, behind only five other states.
BUDGET CHALLENGES FORESEEN
Allen argued that the bills would only increase future budget challenges by increasing reliance on a smaller group of taxpayers and on capital gains, which is a highly volatile revenue source.
"The timing of capital gains income is highly discretionary and the income is concentrated on a small number of taxpayers, causing it to be volatile source of income for the state," said Allen, estimating that it would affect about 1,1oo year-round residents. "This volatility would increase the challenge of managing the state's fiscal position and would likely increase the size of a revenue shortfall during an economic downturn."
Republicans on the Taxation Committee pushed back against the bills.
Sen. Bruce Bickford, R-Auburn, repeatedly asked Democratic sponsors whether their intent was to "punish success," while Rep. Shelley Rudnicki, R-Fairfield, suggested that bills were a way to generate more revenue for Portland's General Assistance program.
And business groups argued that higher taxes would make it less likely for businesses to locate in the state and cause wealthier residents to leave.
But Delucia-Harting said that wasn't the case. She said the additional tax would be "a rounding error" for millionaires who have chosen to live in Maine because of its values and its way of life, while maintaining important programs like continuing to provide wage stipends to child care workers.
"I could live anywhere and I chose to move here," she said. "I'm not going to leave because there's better education ... for my children and their friends."
Another Portland resident, John Coleman, said the tax would allow officials to increase investments in local schools. He recalled being part of special education classes while attending Augusta schools. That extra help allowed him to graduate from college and build a successful career, first as a chemical engineer and later as the owner of an advertising agency.
"I have paid millions of dollars to the state of Maine proudly," said Coleman, who described himself as a "hardcore capitalist. "I was a good investment for the state. ... Taxes are an investment. That's the way I see them."
Taxing wealthier residents to invest in education would make the state a more attractive place to do business, Coleman said.
"I really think if you provide a 4% tax on those of us who have more than enough, we're still going to have more than enough," Coleman said. "But if we do this, and invest in education and infrastructure wisely, maybe every Mainer can have enough. And for me that's the way life should be."
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