Rumors are flying that Gov. John Baldacci will call the Legislature back for a special session sometime this fall, probably in October. His purpose would be to bring forth a bill to reform the state’s tax system. According to news reports, his office is already working on the proposal.

In all likelihood, the governor’s plan will not include broadening the sales tax to services. A legislative proposal that added hundreds of services to the sales tax rolls went down in flames in June, after a firestorm of opposition swept the state. Even though that plan would have lowered the income tax and the property tax, the people of Maine knew that it was merely a tax shift. The governor will not make the same mistake.

The people of Maine want genuine tax relief. We shoulder the second highest state and local tax burden in the nation. We also face the highest property taxes in the country, based on ability to pay. Our top income tax rate of 8.5 percent kicks in practically at the poverty level. Then there’s the tax everyone hates – the so-called excise tax on your car or truck.

This is no longer acceptable. This staggering tax burden is smothering our economy. Job creation has hit a wall, our incomes lag the rest of New England, entrepreneurship has been stifled and too many of our young people have to leave Maine to find work. This is a beautiful state and a great place to live, but as the saying goes, “You can’t eat the scenery.”

We will wait to see what the governor comes up with. He knows that resentment about our taxes is boiling right beneath the surface. He knows that the LD 1 plan to add hundreds of millions of dollars to school funding has failed to provide meaningful reduction of property taxes. And presumably, he also knows the damage that our extreme taxation is doing to our economy and our citizens.

If I were rewriting Maine’s tax code, I would tackle the income tax first, because that is probably our most detrimental problem. This tax simply must be reduced.

Step one would “pay for” the reduction, and I would look to Medicaid, or MaineCare, for the savings, Maine currently has 270,000 people on Medicaid, which provides free medical and dental care. Per capita, we run the largest Medicaid program in the nation, costing Maine taxpayers and the federal government more than $2 billion a year. But here’s the real problem: Maine’s Medicaid recipients each cost nearly twice as much as the national average. Every Maine recipient consumes $8,050 in medical services every year, while the national average is $4,236.

If Maine had average Medicaid spending and continued to cover everyone already in the program, the overall cost of MaineCare would drop by nearly $1 billion. Two thirds of that would be federal savings, since Medicaid uses a federal-state shared program. Maine would save $346 million – about 30 percent of the entire amount collected by the state’s personal income tax.

We now run the most generous Medicaid program in the nation. It covers a whole range of benefits and ailments not covered elsewhere in the country. We can no longer afford such a bounteous program or our economy will sink and we won’t be able to afford much of anything. If we simply limited our Medicaid system to the benefits allowed in other states, we could cut our income tax burden by almost one third, from 8.5 percent to 6 percent. And remember, this is without removing a single person from the Medicaid system.

Lower taxes would bolster our ability to keep funding essential state government programs, such as education and our roads and bridges. Lower taxes, ironically, always increase revenues to the state. They generate increased economic activity – more companies, more jobs, more buying and selling. This is the concept of “supply side economics,” and it never fails.

When President Kennedy cut taxes, revenues climbed from $94 billion in 1961 to $153 billion in 1968 – or 33 percent after adjusting for inflation. Total tax revenues soared by 99.4 percent after the Reagan tax cuts of the early 1980s. Unfortunately for the country, Congress spent even more than the Reagan cuts produced, giving supply-side economics an undeserved bad name.

My point is that slicing Maine’s top rate from 8.5 percent to 6 percent would actually generate more money for the state treasury, while simultaneously boosting our economy. To safeguard the savings, I would make sure that all revenue surpluses were returned to the taxpayers of Maine in the form of continued tax reductions. That would rid us forever of that clever fake license plate we sometimes see – the one calling Maine “Taxationland.”

Rep. John Robinson, R-Raymond, serves on the Legislature’s Appropriations Committee.