CUMBERLAND – Recently, Maine Treasurer Bruce Poliquin was quoted as saying that the $150 million state income tax cut enacted last year was targeted toward job creation.
I sure would love to hear his explanation for how this is true.
Lowering the top state income tax rate from 8.5 percent to 7.95 percent will give a married couple making $50,000 filing jointly a tax break of $55; or $331 if they make $100,000.
How in the world will this translate into more jobs? And don’t go into trickle-down, supply-side explanations, because those explanations have been thoroughly discredited through intellectual debates as well as actual marketplace trials.
There is no correlation whatsoever between cutting income taxes and job creation.
But can’t it be argued that we should let the hard-working taxpayers keep their $150 million? Well, that all depends on what you would do with the $150 million if you instead collected it in taxes.
For example, you could fund the Department of Economic and Community Development, a government agency that supports private-sector companies in creating new jobs in the state.
With DECD’s help, the company I work for expanded to create 30 new high-paying manufacturing jobs a few years ago under Gov. John Baldacci.
When we recently asked DECD for assistance in creating 50 more jobs, the answer was sorry, funds are no longer available for such assistance. We tried the banks, but they are not loaning money to small businesses. Hence, my company has mothballed our expansion plans.
And now there is Kestrel Aircraft Company pulling up stakes and taking their potential for 600 airplane manufacturing jobs to Wisconsin. Why?
Because Maine has de-funded the programs that helped companies such as Kestrel create new manufacturing jobs in the state.
So often I hear about how companies such as Kestrel and the one I work for should be able to grow and expand without a “government handout.”
But with banks unwilling to take on any risk, the state must step in or nothing will happen.
And like it or not, this is how the game is played when competing against other states that do, in fact, care about job creation and have the funds that are required to lure the jobs away from Maine.
If Maine wants the jobs, it must give DECD and other similar state organizations the funds to compete.
If you choose not to, then say goodbye not only to Kestrel but any chance for significant new jobs being created here in Maine, and instead embrace the downward spiral we are currently caught in.
And what about the 65,000 people who the governor wants to cut from MaineCare? If he is successful, this is $66 million that no longer will support programs, facilities and heath care staff. Jobs will be lost.
In addition to 65,000 people not receiving needed health care, this will create layoffs and higher unemployment.
I, for one, would gladly give up my paltry income tax cut to support job-creating entities such as DECD and to fund health care for these 65,000 people.
I am among many who believe that if these are the best places that the governor can find to cut, then we have cut to the bone. Let’s stop cutting before real damage gets done.
But taxes are higher in Maine than most other states. True, we’re a geographically large state with a low population. Road maintenance per person by definition will be higher than in highly populated, small states.
We have the oldest population in the country, translating into a higher cost per taxpayer to support the elderly. Our median income is lower than the national average, causing us to have to tax at a higher rate to get the same tax revenue. I could go on with the explanations. But the point is that our state government would have to provide lower-quality services to our population if we wanted to get our tax rates down.
I, for one, would rather live in a state whose government provides basic, high-quality services for its citizens. I’m not interested in continuous cutting of services in a race to the bottom just so we can say our taxes are lower.
For a generation now, Republicans have been relentless in their assertion that government is bad and tax cuts are good — so much so that many blindly believe it.
But government can do good work that the private sector has no motivation to do, and sometimes these programs are worth the money.
Would you want government to stop paving the roads or providing police protection? Of course not.
And do we want to create jobs in Maine and provide health care for the neediest in our state? I say yes. And all of us collectively will benefit if we do.
Let’s have a debate on whether that $150 million in tax-cut money would be better spent by the state, versus being given back to the taxpayer.
I hope that the treasurer and our governor are not so philosophically close-minded that they will not entertain this worthwhile debate.
Andrew Wright is a resident of Cumberland Foreside.
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