The ‘surcharge’ to fund our schools is a destructive gimmick

This election year, we’ll see a number of ballot initiatives, nearly all of which are awful. But none is quite as insidiously terrible as the so called “Maine Public Education Surcharge Initiative.”

This initiative would slap a “surcharge” — the newest absurd euphemism for “tax” — on individuals making more than $200,000 and (supposedly) earmark any funds raised from this tax… er… I mean surcharge, into a “fund for education.”

Sounds great, doesn’t it? After all, who doesn’t want to stick it to those evil, rich bastards and “help the children” in the process?

Sadly, proponents of ideas this tragically stupid always use gimmicky language to get what they want. And what they want is drastically higher taxes.

Unfortunately, they know the idea of insanely confiscatory taxes itself can’t stand on its own merits, so they try to use language that makes it sound as inoffensive as possible. Hence “surcharge” instead of “tax” and vague comments about “funding education.”

You can almost see the architects of this idea in a room somewhere, working it out in their heads. “Well, we can’t really sell a massive tax hike. But what if we call it a ‘surcharge’ and we say the extra money will go to the schools? Genius!”

Don’t fall for it. This is one of the most destructive policy ideas proposed in the last two decades in Maine.

This tax would basically create another bracket and make Maine the second highest taxed state in the country, with a top rate of 10.15 percent. Read that again. The second highest taxed state in the country.

Currently only California, which has a millionaire’s tax of 13.3 percent, would be higher.

Do you want the wealthy to live in Maine? You should, because their property tax bill helps your town fund the schools your kids attend, they support philanthropic organizations, and their income taxes account for a huge chunk of the state budget.

And they will leave in droves if this question passes. When they do, you won’t get one red cent of their money.

No one is asking you to feel sorry for a wealthy person having to pay taxes, but the reality is that there are points beyond which high taxes lead to wealth moving to avoid tax punishment, which is especially true in Maine.

New Hampshire and Florida — one state next door, one where many Mainers spend the winter — have no income tax. We have already seen tremendous flight of Maine’s wealthy to these (and other) locations over the preceding decades.

Thousands of millionaires who once lived here now live somewhere else and, as a result, we get nothing from them.

If this surcharge tax passes, a substantial number of them will say, finally, “to hell with it” and move away. If even a small number of them go, any supposed “tax benefits” of the higher rate will evaporate, making the entire endeavor pointless.

Additionally, Maine is a very old, poor state that lacks a lot of good, high-paying, quality jobs. We need to attract more — and more diverse — businesses to our state to try to change that fact.

We can’t change that fact with higher taxes, which is something most of the rest of liberal New England understands.

Massachusetts has a flat tax rate of 5.1 percent, Rhode Island has a top rate of 5.99 percent, Connecticut has a top rate of 6.99 percent and New Hampshire has no income tax, save a 5 percent rate on interest and dividends.

Maine can’t compete with its neighbors with a top rate of more than 10 percent. Imagine being a business owner from New Hampshire considering a move or expansion to Maine. Would you come here and give yourself and all your employees a massive pay cut just to pay taxes?

But tax policy isn’t even the worst part of this ballot question. The real foolishness is the attempt to link education funding with education quality.

I think we all agree that we are unhappy with our education system. What we’re doing isn’t working, and our kids are falling behind. We all want to fix it.

Reuters photo by Kham.

Reuters photo by Kham.

But do we fix it with some vague concept of “more money for education?”

Student enrollment peaked at nearly 250,000 in the 1970s, and since that time we have seen a decline of more than 60,000 students in our schools. Yet our budgets have exploded. Federal, state and local contributions have risen by well over a billion dollars in that time. Since the early 2000s, Maine’s per-pupil spending has risen by roughly $4,000.

Fewer kids. Way more money. Worse results.

Are we sure the answer to this problem is shoveling more money — that we won’t even really get — into a broken system while destroying our economy?

Matthew Gagnon

About Matthew Gagnon

Matthew Gagnon, of Yarmouth, is the Chief Executive Officer of the Maine Heritage Policy Center, a free market policy think tank based in Portland. Prior to Maine Heritage, he served as a senior strategist for the Republican Governors Association in Washington, D.C. Originally from Hampden, he has been involved with Maine politics for more than a decade.