Mainers rally in Augusta in 2019 for a fair tax code | Beacon
Orignally published in Maine Beacon, January 13, 2022
Advocates and progressive lawmakers are planning to push a series of tax fairness measures this legislative session in an effort to rebalance Maine’s tax code and ensure that the wealthy and corporations are paying their fair share.
Legislators are set to consider a measure to conform Maine law with a stipulation in the federal Inflation Reduction Act that set a minimum corporate tax rate to ensure big businesses pay taxes, a bill to expand and better target the state’s child tax credit to help lower-income families, and legislation to fix a policy from last session that froze property taxes for older Mainers but that advocates believe was poorly constructed.
Other tax fairness measures the legislature will likely take up include a bill to force corporations to be more transparent about how much they pay in taxes and a measure to clamp down on big businesses that hide profits overseas.
Passing tax reform measures in recent years has been complicated by Democratic Gov. Janet Mills’ repeated pledge not to raise taxes, even on the wealthy, who reaped major benefits from tax cuts implemented by former Gov. Paul LePage. Mills vetoed the only progressive revenue bill that came to her desk during the 2021 session. That bill would have bolstered underfunded affordable housing programs by adjusting Maine’s real estate transfer tax to implement higher rates on the wealthy.
Still, some bills that simply made the tax code more balanced were successful last year, including a measure to stop large chain stores from exploiting a “dark store” tax scheme by arguing that their retail properties should be valued the same as abandoned shopping centers that have lost economic value. Mills allowed that bill to become law without her signature.
This year, advocates appear to be pursuing a similar strategy: pushing for a more just tax code rather than raising tax rates, especially with the state once again registering a budget surplus.
“From our perspective it’s more about fairness and what [the wealthy and corporations] actually owe,” said Maura Pillsbury, state and local tax analyst with the Maine Center for Economic Policy (MECEP). “Rather than seeing it as an increase in taxes, we would just see it as tax fairness.”
Along with the governor, advocates must also deal with a legislative Taxation Committee featuring a litany of new faces. Sen. Nicole Grohoski (D-Hancock), who has carved out a progressive record on some issues, will chair the committee on the Senate side. And returning to the committee will be Sen. Ben Chipman (D-Cumberland), another progressive. Chairing the committee on the House side is Rep. Joe Perry (D-Bangor), who has supported some tax reforms. Perry told Beacon in a recent interview that he believes corporations have made large amounts of profits recently and that he wants to help people on the lower end of the income spectrum.
“It’s the lowest income people who pay the biggest percentage of their income and who struggle the most,” he said. “So, I want to see fairness.”
One challenge to passing such measures, however, is that the Taxation Committee only has a 7-6 Democratic majority, rather than the 8-5 split present on many other committees. Still, Sarah Austin, director of policy and research at MECEP, said she feels optimistic about the chances of pushing through strong tax reforms this year.
“We’re excited. We know that corporate taxation is something that the public really wants to see more fairness in,” she said. “We have a lot of public support on our side.”
Specific policies include child tax credit, corporate tax measures
One major policy being introduced this session is an expansion of Maine’s child tax credit. The child tax credit was expanded at the federal level in 2021 in a move that some experts estimated cut child poverty in half during that year. However, Congress allowed the program to expire at the beginning of 2022.
House Majority Leader Mo Terry (D-Gorham) is introducing a bill to make Maine’s existing child tax credit refundable, which would allow those lowest on the economic ladder to benefit from it. The bill would also increase how much families receive under the existing credit, although the amount of that expansion has not yet been finalized.
Terry argued that an expanded child tax credit would be beneficial for families across the state.
“We saw the benefit of what a child tax credit looks like on a regular basis from the Biden program,” she said, referencing the federal legislation from 2021. “So if they’re not continuing theirs, I thought we could continue ours or expand on ours and make it so we can help our working folks with kids as much as possible.”
Perry said he also saw the benefit of the federal child tax credit program through increased business at his general store when the initiative was in effect. He expressed general support for the concept behind Terry’s bill.
A series of measures related to corporate taxes are also expected to be introduced this session. One such bill, Pillsbury said, will deal with a policy included in the federal Inflation Reduction Act that set a 15% minimum corporate tax rate for businesses making over a billion dollars in profit. That move came after reports that dozens of massive corporations paid zero in federal taxes on their 2020 profits.
Pillsbury said MECEP is pushing for Maine to conform its state tax code with that policy from the federal government so that profitable corporations here have to pay a minimum tax rate as well. Austin said she’s hopeful that effort will be successful, as the Mills administration has shown willingness to conform state taxes to the federal code in the past.
MECEP is also pursuing corporate tax transparency. Under that legislation, corporations would be required to report how much they pay in income taxes, which big businesses have often been resistant to do.
“We really believe the public deserves to know if corporations are paying their fair share and there should be greater transparency in what corporations are paying in taxes and what they’re receiving from the government in tax incentives,” Pillsbury said.
A third corporate tax measure is a continuation of a bill previous legislatures have worked on. Last session, lawmakers passed a measure requiring the state to study how Maine could implement a policy to crack down on corporations hiding profits offshore to avoid paying taxes. The Maine Revenue Service’s report on the feasibility of that policy is due in February, Pillsbury said.
Austin said advocates are hoping for buy-in from the Mills administration to address the issue. She also cited a report by the Institute on Taxation and Economic Policy that estimated tax dodging by corporations via offshore havens costs the U.S. $60 billion and Maine $52 million in revenue each year.
Pillsbury said she expects corporations to fight back against any tax haven measure along with the conformity to the federal corporate tax rate bill and the transparency legislation.
“They’ve already pushed back pretty hard,” she said. “So I would expect with anything around transparency or taxation of corporations that they’ll be pretty active and pretty public.”
One additional measure advocates are working on this year is a fix to a bill passed last session that froze property taxes for Mainers 65 and older who applied for the program. Terry, who is introducing the reform, said the original bill was rushed through the process and was poorly targeted, simply providing property tax relief to older Mainer who signed up, regardless of economic status. It also put a burden on municipalities to administer the program, she said.
The fix Terry is proposing would better target the law by providing property tax relief for older Mainers who are lower-income, rather than anyone 65 and over. While Terry said she still feels uneasy about the age requirement in the program, better targeting it for older Mainers is a step in the right direction.
“It’s at least a solution that’s better than what we have in place now, which is essentially mayhem,” she said.
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 firstname.lastname@example.org.