Democrats Resurrect Tax On Fun, But Why?

What is a smaller, less impressive, and less meaningful conflict than a kerfluffle? A ruckus? A fracas? A brouhaha?

The brief argument (if you blinked, you might have missed it) over the Democrats’ tax on fun qualified as, perhaps, half a ruckus. In case you did blink, the proposal to tax a wide range of goods and services that are now exempt came from a special committee created to fill a $40 million hole left in the budget.

You would be forgiven for being confused by this. After all, the Maine Constitution requires that the state budget be balanced. Regardless of that, it’s become commonplace for the Legislature to pass budgets that aren’t quite balanced but depend upon a task force with an impressive name to find additional savings.

The difference with this latest iteration was that rather than finding savings through spending cuts, its mandate was to eliminate tax breaks and bring in more revenue.

If this idea to create new taxes on such items as haircuts, lift tickets, concerts, movies, amusement parks, zoos, and gym memberships sounds familiar, that’s because Democrats have tried it before.

In 2003, there was the grandiose-sounding “Speaker’s Advisory Committee on Tax Reform”; in 2007, there was the misleadingly-titled “An Act To Cut Taxes On Maine Residents By Over $140,000,000”, which Democrats couldn’t even convince their own legislators to support.

Then, in 2009, Democrats finally passed a slightly scaled back tax on fun in almost a straight party-line vote, only to see it vetoed by Mainers at the ballot box by a double-digit margin. Undaunted, earlier this year, it was almost resurrected as part of a bipartisan tax reform scheme; thankfully that went exactly nowhere.

You’d think, after four failed attempts, Maine Democrats would have wised up and finally abandoned their tax on fun.

Instead they took the worst part of all of those ideas and resurrected it on its own.

This time, they wanted to tax even more goods and services than they did in 2009 (haircuts, for example, are back in) – without any attendant tax relief.

The real question here is why members of the committee decided to float the tax on fun at all. After all, their mandate was to examine and reduce or eliminate tax expenditures, not to create entirely new taxes.

Evaluating tax expenditure programs for their effectiveness is an idea that has always had much broader bipartisan support than simply raising taxes. Democrats on the committee had to have known that this would go nowhere with Republicans.

After caving on taxes in the budget to begin with, the GOP isn’t about to vote for a tax hike they’ve opposed for years.

The sudden proposal of the tax on fun was especially striking because it looked to be a reversal of some committee member’s original ideas. At first, Democrats seemed to think it would be no trouble for them to find tax exemptions to eliminate that wouldn’t impact the average Mainer.

They went from there to proposing a broad tax increase that would affect hundreds of Maine families. Why?

It may have been because as the committee examined the different tax expenditure items, they found resistance from special interest groups to cutting any of them. Unfortunately, if they were lobbied heavily on preserving some of these items, we have no way of knowing.

While lobbyists normally have to report their attempts to influence, they are exempt from doing so here because it is a task force rather than a regular legislative committee. That means we can’t know what industry groups did to try to shift the $40 million burden to us instead of them.

Fortunately, one side effect of the committee’s failure to come to an agreement is that action now shifts to the Appropriations Committee, which falls under all of the normal disclosure rules.

As Appropriations debates how to close the budget gap they created, we’ll be able to see who’s trying to get the Legislature to cut the historic preservation tax credit, which helps fight urban sprawl and preserve the environment. We’ll be able to see who wants to scale back the Opportunity Maine tax credit, which makes it easier for Mainers to get a college education and stay in the state after they graduate. We’ll know which special interests would rather make Mainers pay more for haircuts and movies than scale back their own handouts.

Hopefully, future Legislatures will finish all of their work on time and pass a complete budget, rather than passing the buck on to a special task force. Leaving these gaps in the budget are a loophole around the regular budgetary order in Augusta, just like continuing resolutions are at the federal level.

These debates should happen as part of the normal legislative process. The Legislature needs to stop ducking the Constitutional requirement for a balanced budget, and start getting this right the first time around.

Maine needs to show D.C. the proper way to govern, rather than trending towards imitation of their dysfunction.

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Jim Fossel

About Jim Fossel

Originally from Alna, Jim Fossel has volunteered with a number of campaigns over the years, including for Peter Mills for Governor in 2006. He previously worked for U.S. Senator Susan Collins and House Republican Leader Josh Tardy.