The high tax burden in Maine

Bangor Daily News ^ | 27 September 2002 | Jonathan A. Speros

[SheLion]

In each of the last six years, Maine has earned a distinction that will not make state residents proud: the highest state and local tax burden of any state in the United States. According to the Tax Foundation (a widely respected nonpartisan educational organization founded in 1937),the amount of state and local taxes collected as a percentage of income is higher in Maine than any other state in the nation. In fact, for the past 30 years, Maine has consistently had a higher state and local tax burden than the United States average.

Furthermore, since 1995, Maine’s disparity from the national average has grown to the point where Maine’s current 13.6 percent tax burden is 33 percent higher than the national average of 10.2 percent.

The problem is exacerbated when one compares Maine to its closest U.S. neighbors: New Hampshire and Massachusetts. New Hampshire is the only state that borders Maine but the difference in tax burden is striking. Despite the comparatively higher property tax burden in New Hampshire (second compared to seventh for Maine in property tax collections per person), the overall tax burden in New Hampshire is very low at 7.6 percent because there is no sales tax or earned income tax for workers. The tax burden in Maine is more than 75 percent higher than in New Hampshire, while New Hampshire ranks as having the third lowest tax burden in the country (only Tennessee and Alaska rank lower).

Massachusetts, once derided as Taxachusetts, has significantly reduced its tax burden over the last 25 years from more than 12 percent to its current level of 9.5 percent, giving it a ranking of 39th overall. Significant tax reductions over the last 12 years accompanied by strong income growth have moved Massachusetts from one of the highest tax burdens to one that is less than the national average.

In terms of perception, the high tax burden in Maine does not promote a business-friendly image. Substantively, this high tax burden places Maine at a significant economic disadvantage when trying to retain and attract the types of businesses that are important to the long-term economic growth of the state. These types of businesses generally export goods and services outside of the state and are in industries such as manufacturing, financial services and customer services through call centers. Because these businesses generate most of their revenue from outside of Maine, they need to have other specific reasons to stay or locate in Maine.

In conjunction with attracting and retaining these businesses, Maine must also slow down the out-migration of young workers entering their primary earnings years. During the 1990s, Maine saw a net out-migration of almost 30,000 people under the age of 35 who are the workers that the businesses need in the export industries. The businesses must be here to ensure future economic opportunities for these workers in order to keep them in Maine.

Maine must compete with New Hampshire and Massachusetts (along with the rest of the United States and the world) to retain and attract the export businesses. This will give young workers the job prospects needed to remain in Maine. If Maine is able to reduce its burden to a level closer to the national average, businesses will have one less hurdle to overcome in order to stay and prosper in Maine.

Jonathan A. Speros is senior manager and leader of the Northeast Credits and Incentives Practice for PricewaterhouseCoopers LLP. He and his firm were commissioned by the Institute for a Strong Maine Economy to contribute to the research paper recently published, “No Place to Hide: Confronting Maine’s Economic Future.”

Editor’s note: This is the fourth of five commentaries addressing tax investment and reform raised in the study, “No Place to Hide: Confronting Maine’s Economic Future.”

 

[SheLion]

[SheLion]

Maine Alert. But we already knew this, didn't we.

[ocean]

please, please dont let the bald one win the Blaine house.

[Blood of Tyrants]

One of the grat things about NH is that it has no sales tax on store bought goods and no income tax. This lures many people near the borders to shop in NH and work there (if they can find a job) and live outside the state.

[Redbob]

"Significant tax reductions over the last 12 years accompanied by strong income growth..."

This reference to Massachusetts is the single most-important line in the entire article.
Why can't people understand this simple economic fact?

[Redbob]

NH has no income tax? The article says no earned income tax, which as Tennesseans know, can mean something else entirely.

In Tennessee, for example, dividend, interest, and other investment income is considered "unearned," in their Marxist, class-warfare way, and is taxed at 6%!

[Blood of Tyrants]

Perhaps I should have said paroll/wage tax.

[sox_the_cat]

The bald one doesn't want to raise sales taxes according to his spokeswoman, he simply wants to expand what is covered under the sales tax. I love the clarification, Donna, New Hampshire has no sales tax and Mass will not tax necessities, like clothing. Good thing Maine has that lovely use tax to collect all of the revenue that is going to NH and Mass.
The Clinton crony also voted down the marriage tax penalty repeal. My father grew up in the same neighborhood as the bald one and always defended him, but nearly fell off his chair when I told him that one. That vote is one of the most indefensible votes, I hope that is made abundantly clear to all of the married voters in this state.

[larryjohnson]

Thanks for pinging me on these items. I am scared,real scared of increased taxes.On my fixed pensions, the scariest is property tax. I have no control over the assessments of my land based on the sale of nearby land. My property is worth what I paid for it until I sell it. Then it is worth what the buyer pays me. California saw this as fair in 1976 when they passed their Prop 13. We need reform like this.

[SheLion]

larry, I sure know what you mean. We received a post card in the mail the other day, that "they" want to come into my house so "they" can access our property. So, that is telling me they are going to raise property taxes........again! I tell you, I can't stand it. We had to tighten our belts, why the 'ell don't they tighten theirs.

This is getting way out of hand with the City Councils. They spend our money like they lost a rich dead uncle. Well.......our uncles are dead!

[Risa]

We are doomed if the bald one wins the election.
risa

[GailA]

Tennessee Tea Party bump

[Madame Dufarge]

Even the Commies in Massachusetts got the picture on lower taxes and economic growth.

I went to the post office yesterday and there was a group from "The People's Alliance of Maine" (7 or 8 people) holding a huge banner demanding "Single Payer Healthcare NOW!"

It infuriated me, because I know how many passers-by probably agreed with them.

The welfare mentality in this state absolutely sickens me. When they gobble up the last dollar, and the only business left is selling and reselling the same cord of wood, they still won't get it.

[Leisler]

Wood or their daughters. What ever brings in the highest. Usually, it's the wood.