April 9, 2010

CEOs start campaign backing tax reform law

AUGUSTA -- With the Legislative session nearly over, renewed attention is being turned to the tax reform question coming before voters in June.

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EXECS LINE UP: Wick Johnson, president and chief executive officer of Kennebec Technologies, was among business leaders at a State House news conference Thursday who backed a tax reform law that's subject to a GOP-led people's veto referendum in June.

Staff photo by Joe Phelan

Democrats say reform will lower taxes, balance state revenue, and increase Maine's business image. Republicans are rallying support for the people's veto to repeal the tax reform legislation passed in June 2009.

At that time, reform had only one Republican supporter: Sen. Peter Mills, R-Cornville, who is now running for governor.

Mills was in the audience Thursday at a State House press conference to announce the "No Higher Taxes for Maine" campaign in support of tax reform.

"Once people hear what the bill is about, they support it," he said. "There's a certain philosophy that if the Democrats thought it up it must be bad."

The press conference featured a diverse group of business leaders who are urging voters to support tax reform. They include Wick Johnson, president and CEO of Kennebec Technologies in Augusta, Chip Morrison, president of the Androscoggin Chamber of Commerce, Bruce Wagner, CEO of Barber Foods, and Jim Wellehan, CEO of Lamey-Wellehan shoe stores.

Johnson laid out the specifics of tax reform, which if it survives the June 8 vote, would lower the maximum state income tax rate from 8.5 percent to 6.5 percent, and broaden the sales tax to more goods and services and increase such the meals and lodging tax from 7 to 8.5 percent.

Thirty percent of tax revenue from meals and seventy percent of tax revenue from lodging today comes from out-of-state tourists, according to supporters and opponents of the citizen's initiative.

"The Maine Revenue Service estimates that the new law reduces the tax burden on Maine residents by approximately $53 million, most of which is exported to non-resident taxpayers," Johnson said.

The tax cut balances out, supporters say, because the sales tax basket is shifted to collect more money from tourists.

"I actually don't mind if Martha Stewart pays a little bit more when she comes to Maine," added Karl Turner, a former Republican state Senator from Cumberland who spoke at the press conference.

Sen. Jonathan Courtney, R-Springvale and Assistant Minority Leader in the Senate, predicted a groundswell of resistance to the Democrats' tax package.

"When people start to find out what's in it -- a sales tax on auto repair, and expansion of what's going to be taxed -- I think that people are just not going to trust the Legislature that they're going to be able to get any relief out of it," he said.

Under tax reform, Mainers would pay an additional 0.35 percent surtax on income beyond $200,000. Since about 90 percent of businesses in Maine pay taxes as either sole proprietorships, partnerships, or S-corps, they will be affected in the same way as individuals, said Rep. John Piotti, D-Unity, who crafted the original package.

"No business sees a change in their business deductions, but for 90 percent of Maine businesses, they will pay a lower rate on their net earnings," he said.

Supporters of the people's veto have also organized a political action committee -- Vote Yes to Reject New Taxes.

The group -- led by Curtis Picard, executive director of the Maine Merchants Association -- has so far raised $2,700.

Their largest donation of $1,000 is from the Auto Service Professionals of Maine, in South Portland. The latest financial disclosures for political action committees are to be filed with the state on Monday.

Ethan Wilensky-Lanford - 620-7016


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