Economist Weighs In On Governor of Maine's 2016-2017 Budget

Economist Weighs In On Governor of Maine's 2016-2017 Budget

The top state official has proposed overhauling a wide range of tax policies, with lowering income taxes for residents and corporations a major focus.

Push to reduce income tax burden

LePage has repeatedly made efforts to reduce income taxes for both individuals and companies, and announced earlier this month that he wants to provide The Pine Tree State’s voters with a referendum that will give them the option to eliminate Maine’s income tax permanently, according to The Bangor Daily News.

If this constitutional amendment is successful, it would add Maine to the nine states that have no income tax currently, the media outlet reported. LePage wants to place this option before voters in 2016, with the intention of having the income tax eliminated completely by 2020.

In the interim, Maine’s governor is working to reduce this burden for residents and corporations, proposing in the governor of Maine’s 2016-2017 budget that the state cut its top corporate income tax rate to 6.75 percent from 8.93 percent.

Economist reply

When responding to Maine’s 2016-2017 budget proposal, Yarmouth lauded the governor’s approach, stating “I hope you pull this off,” according to The Bangor Daily News. In addition, he emphasized his reservations, stating that the legislature may resist specific aspects of the proposal. The economist noted that one major cost created by the proposal was lower tax revenue.

When speaking to individual provisions, Yarmouth singled out the proposed cut in corporate income taxes, stating that while the current policy may drive companies away, LePage’s proposed reduction may be too much, the media outlet reported. Instead, Yarmouth advocated providing a more modest reduction in the top rate.

Income tax changes

In his 2016-2017 proposal, LePage has suggested increasing the individual income tax exemption to $9,700 from its current level of $5,000. In addition, he has suggested lowering the tax rates for those in higher brackets.

The current exemption level came from a 2011 proposal supplied by the governor, which resulted in the state eliminating income taxes for both those at the lowest end of the spectrum and also reducing the rates on those in the highest bracket.

Push to eliminate income tax

In continuing these progressive reforms, LePage has since announced his desire to eliminate the state’s income tax entirely.

Yarmouth has criticized such statements, asserting that talking about scrapping the income tax completely could result in the governor losing a great deal of support, according to The Bangor Daily News. The economist asserted that before even considering such a measure, he wants to get a better sense of what the budget will be. Yarmouth did, however, leave the door open to such a possibility.