Photo: Mainers rally in Augusta in 2019 for a fair tax code | Beacon
he wealth of the 30 highest income earners in Maine nearly doubled from tax year 2019 to tax year 2020, a recent report from the Maine Revenue Services Office of Tax Policy shows.
The report, which helped inform a December 2021 revenue forecast that projected a large surplus for Maine over fiscal years 2022 and 2023, found that “In tax year 2020, the income tax liability of the top 30 taxpayers ($68.4 million) is 94% higher than top 30 in 2019 ($35.2 million).” Tax liability refers to the amount of money owed in taxes.
Sarah Austin, director of policy and research at the Maine Center for Economic Policy, said because there weren’t any big changes to the tax code between those two years, that increase in liability for the wealthiest 30 earners in 2020 over 2019 “is a reflection of how much income is being reported by the richest people in the state.”
Austin said assuming that the 30 wealthiest filers in Maine paid about 7% in state income tax, the average income of those in that cohort went from about $16.7 million in 2019 to about $32.5 million in 2020, although she added that the richest 30 filers in Maine in 2019 weren’t necessarily the same people as the richest 30 in 2020.
“It’s enormous, it’s a huge jump,” Austin said of that rise in income.
Austin said one factor that likely contributed to the increase was the strength of the stock market and corporate profits in 2020. Because the richest Americans own the vast majority of U.S. stocks, they tend to benefit the most when the market goes up, she said.
The increase in income for the state’s wealthiest comes as a pandemic that has laid bare the flaws in the state’s social safety net and exposed the vulnerability of many Maine workers continues to rage. During the crisis, one in four Maine adults have reported not being able to afford weekly household expenses. In addition, job losses from the pandemic have been particularly concentrated among Maine’s lowest wage earners. And around the state, a projected 13.5% of people could face food insecurity issues.
Nationally, a similar picture has emerged. Amid the crisis in 2020, the richest 400 Americans saw their wealth rise 40%, adding $4.5 trillion in riches. In contrast, nearly 20 million adults live in households without enough to eat, according to a recent report from the Center on Budget and Policy Priorities, and 12 million renters are behind on housing payments. Additionally, a year after the onset of COVID-19 in the U.S., a Pew Research Center study found that about four in ten Americans were struggling financially.
The yawning disparity between the rich and the rest of Americans has promoted renewed calls for tax fairness policies that ensure the wealthiest pay their share.
In Maine, though, such efforts have faced roadblocks. During former Gov. Paul LePage’s time in office, Maine passed tax cuts that favored the wealthy and corporations. And during the legislative session earlier this year, a litany of tax fairness proposals were voted down. The only such measure lawmakers did manage to pass — a bill that would have made Maine’s real estate transfer tax more progressive, implementing higher rates on those with more wealth — was subsequently vetoed by Democratic Gov. Janet Mills.
“There’s a lot of work to be done on the policy level to make sure we are leveling the playing field here and making sure that everyone is able to come back from the pandemic stronger and [that there is] not just huge power and wealth accumulation for folks at the top,” Austin said.
At the national level, the Build Back Better bill — which passed the House in November and is currently being considered in the Senate — is projected to raise average taxes for people who make over $1 million by 3.2%. That bill would strengthen the social safety net in the U.S., investing in child and health care, reductions to the cost of prescription drugs and fighting climate change, among other policies.
Austin said the wealth growth of top income earners shows that needed social service programs like those in Build Back Better can be funded by increasing taxes on the rich.
“This is where to go for raising revenues ethically and in a way that can actually afford the investments that we need to make,” she said.
Author: Evan Popp studied journalism at Ithaca College and interned at the Progressive magazine, ThinkProgress and the Reporters Committee for Freedom of the Press. He then worked for the Santa Fe New Mexican newspaper before joining Beacon. Evan can be reached at email@example.com.
Source: Maine Beacon, December 2, 2021, https://mainebeacon.com/income-of-wealthiest-in-maine-nearly-doubled-from-2019-to-2020-report-shows/