Thursday, December 12, 2013
Sen. Doug Thomas
FOR YEARS, WE'VE been told Maine needs "tax reform." We're told that Maine's tax code doesn't produce a steady stream of revenue and it is too volatile.
Really? Granted, revenue streams into state coffers fluctuate, and there is considerable difference between the highs and lows.
Instead of raising taxes during low times, the state should reduce its spending to reflect its lower income levels, the way most families budget.
When the economy is good and revenue is up, we could add some capital spending that we've put off and pay cash for it. We could avoid borrowing and interest expenses, and, best of all, we could finally get off this roller coaster of ever-increasing tax rates.
I'm reminded of the bumper jack that came with my first car. It would go up just fine, but it wouldn't go down. I'd jack up the car and change the tire then I'd have to push the car off the jack; and the car would come crashing down. When do we come crashing down?
We don't need tax reform. What we need is spending reform.
A proposal to reform Maine's tax code was defeated in the Legislature again this year. The idea was to eliminate most of the sales tax exemptions and use the revenue to reduce income tax rates. It was very similar to the plan that was defeated at the polls just a couple of years ago.
The thought of paying a 6 percent sales tax on groceries and to heat our homes alarmed many of us, and we managed to nip this idea in the bud. Perhaps if we did pay taxes on the essentials of life, it would even out the flow of money to the state, but is paying taxes more important than feeding our families?
Even though "tax reform" has been soundly defeated time and time again, the Legislature is going to try to get it done a little at a time through the back door. A special committee is meeting this month to find $40 million in exemptions they can take away from us.
When we look at the items we don't pay income tax on, one of the biggest is health insurance provided by our employers. That "costs" the state $151 million a year.
If it were up to me, we would exempt health insurance premiums paid by everyone; and if it were put to referendum I would bet the vote would be a resounding yes.
In addition to groceries and home heating oil, we don't pay sales tax when we go to the doctor or dentist, or if we buy a guide dog. How would paying taxes on those items benefit anyone but big spenders in government?
If sales tax was added to municipal water bills, it would add more than $8 million to the General Fund; $20 million if sales tax was charged on rental housing; $15 million if we taxed prescription drugs.
It's easy to see why many favor this approach to raising taxes; there's real money involved. That money, however, must come from somewhere, and it would have to come from us.
Let's forget this idea then, and find ways to get the necessary jobs of government done with existing revenues.
Sen. Doug Thomas, R-Ripley, serves on the Legislature's Taxation Committee.