Five years to eliminate the state’s income tax? Sign me up.
This week, Gov. Paul LePage made his long awaited proposal to fully eliminate the Maine income tax, and he is giving lawmakers until 2020 to figure out how to do it.
Under LePage’s proposal, the Maine Constitution would be amended to specifically restrict the state from being able to collect income taxes after the year 2020. That’s the goal. The big picture. The 30,000-foot view.
Absent is any plan or recommendation for how to get there. While this has caused a fair amount of wailing and gnashing of teeth from my friends on the political left, I actually believe very strongly that this is the proper way to go about it.
If LePage’s goal is truly to get rid of a tax on income, and if he truly — as he has said for months — is open to any and all ideas for how to get there, than this strategy is entirely appropriate. Set a benchmark that has no choice but to be met (thereby putting pressure on legislators who are notorious for not pursuing sweeping change), and then leave it to them to come up with a compromise that achieves that goal in the allotted time.
And they’ll have the time to do it. Legislators will have three budgets — the 2016-2017, 2018-2019 and the 2020-2021 biennial budgets to be precise — to make the necessary changes.
Don’t get me wrong, it won’t be easy. But state legislatures have, for decades, failed to undertake wholesale, deep reform, and I won’t be shedding a tear that they would be given a ticking clock to force their hand and make them confront the need for major change.
A good start would be to finally take seriously the issue of spending, as I made clear in my column two weeks ago. Only once in 40 years — the 2010-2011 biennium — has a Maine budget gone down. Gov. LePage’s own budget proposal for this year raises spending by roughly $166 million.
The argument in fashion on the left right now is to tell you that “income tax cuts don’t work and don’t matter,” and they love to point to examples like Kansas, which recently passed a major tax cut, to demonstrate why.
But the Kansas tax reform package hasn’t been around long enough to tell you much of anything about its impact, and the “disaster” Democrats keep referring to is, like so much of government, a spending problem. Kansas cut taxes, and they grew spending at the same time, so now they face a revenue problem. Who knew? Maybe, just maybe, spending is the problem.
I would suggest that in the 2016-2017 biennium, we aim for a budget that is “only” $6 billion, rather than the $6.5 billion that is currently being proposed. The exponential increases built on top of exponential increases have created a bloated mess, and it is time we admit that and try to do something about it.
The Democrats, of course, are already demagoguing the proposal to eliminate the income tax, cherry picking the amount of money that would be “lost” to the state if we did not collect an income tax.
What they fail to tell you, of course, is that there are many ways of getting revenue, and the recent push to move from an income tax base to a consumption tax base provides not only a more stable revenue stream to government, but off-boards much of the funding to non-residents and tourists.
Extensions of the sales tax to areas it does not currently touch are but one of many options. Don’t let the left get away with terrifying threats. The government could easily be funded without a single program cut, if lawmakers in Augusta wanted to go that route. They shouldn’t, but they could, which makes the entire argument nonsense.
But back to the proposal, it is long past time to make a major and dramatic change to Maine’s tax code. The income tax being eliminated will make Maine a more attractive location for entrepreneurs and labor, it will be a phenomenally helpful thing for small business, which makes up the backbone of the Maine economy, and it will represent the biggest raise workers of all income levels will get in Maine for years.