The Tax Foundation currently ranks Maine as having the 9th highest top marginal individual income tax rate. Were it not for Vermont, New Jersey, and New York, we’d have the highest top marginal tax rate on this side of the Mississippi River. Their top individual rates kick in at more than $400,000; $500,000; and $1 million of taxable income, respectively. Maine’s current top rate starts at $20,900. With this proposed Constitutional Amendment, Maine has the opportunity to become the 10th state in the nation with ZERO income tax.
Maine residents already pay significant income tax to the federal government, and we believe the federal government has cornered the market on it. While US tax policy should ensure we are making the nation competitive globally, we have an obligation to make Maine competitive with other states. We want to attract job creators. When an out of state company buys a growing Maine business, we’d like them to keep the corporate headquarters in Maine and move more high paying jobs into the state, not out of it. When a person at a company gets offered a promotion that requires a move from Dallas, Texas or Chattanooga, Tennessee to Maine – we want those people to come. We want to see the investment and activity that you see in states like Florida, New Hampshire, South Dakota, Wyoming and Nevada. I’ve heard this committee before discuss why people move to Florida and suggest it’s not just for the income tax. Well, I’ve heard from tax accountants and estate planners that there are certainly some that do. But let’s say someone has their primary residence in Maine and a second home in Florida to get away from winters like the one we just had. If you’re already spending 3 months a year in Florida and could protect your pension by increasing that stay to 6 months and a day, I’m pretty sure you’d consider it. We want people to maintain their primary residence in Maine and their second home in Florida, not the other way around. We already have a high share of the second home market – lets grow the number who are proud to call Maine their primary residence. Let’s create incentives for the many young people of Maine who leave home for school and to start their careers to move back to a Maine without an income tax, where they can keep the money they earn and where they can invest, buy homes, raise their families and have fulfilling careers.
The Governor understands that the income tax is not a silver bullet and is not the only step we need to take to make Maine more competitive. You’ve seen him work hard to lower energy cost, advocate for education reform, and continue to ask for business reforms like the Right to Work. I’ll not discuss any of those proposals now other than to note that this Governor will keep fighting on all fronts to help people of Maine move from poverty to prosperity, and he believes that elimination of the income tax is one of the most powerful steps we can take to inject new activity into our economy and give Mainers the most meaningful wage increase the state has ever seen.