Gov. Paul LePage is seeking major changes to our taxation system in his proposed state budget. As a member of the Legislature’s Taxation Committee, I have many unanswered questions about how the massive changes put before us would impact Maine people.

I am wondering how Maine would benefit from the elimination of the estate tax. It is a significant revenue source that affects only a very small sliver of Maine’s multimillion dollar estates. We do know that in 2013, out of hundreds of thousands of tax filers, only 154 estates — nearly half of which were those of out-of-staters — were impacted by the current estate tax. These immensely wealthy individuals, whose estates will still pass on millions of dollars to their heirs, contributed over $32 million to help fund Maine’s roads, K-12 schools, colleges and health care for our neediest children.

Members of the committee asked whether this tax affects family businesses and farms. We were assured that, under CURRENT law, provisions help closely held family businesses and farms pass to the next generation without paying estate tax. Maine Revenue Services officials could not recall a case of a business or farm being lost due to the tax. They have asserted that eliminating this tax will prevent Mainers from moving away or establishing residence elsewhere.

They’ve been asked what evidence shows this is the case, but none has been provided. I want to know whether research shows that tax policy affects people’s migration patterns. We do know that data reveals that more people of all income levels move from New Hampshire to Maine rather than vice versa.

As the committee digs into the details, we are asking lots of questions. We just received two documents from Maine Revenue Service: The Tax Incidence Report and a Distributional Analysis of the governor’s proposed tax plan. Both may help answer some of the questions raised by this budget proposal.

Specifically, we need to find out if these proposed tax policies work as well for the majority of Maine people — especially the middle class — as they do for the wealthiest taxpayers. This does not seem to be the case. The Distributional Analysis shows that a household making $40,000 would receive a total average tax break of $145 for income, sales and property taxes upon full implementation of the governor’s proposed plan in 2019. A household making $400,000, meanwhile, would receive an average tax break of $10,600. The governor’s plan fails to provide tax relief to Maine’s middle class.

Moving to another area of major change, the Tax Committee had many questions about the proposed expansion of the sales tax. Who will be most affected? Which ones are truly a matter of taxing spending choices and which are taxing necessities? Is summer camp tuition taxable? Should we really tax people who find themselves in need of a lawyer? The proposal to tax professional services is new territory with many unanswered questions. Can we really say that legal services are not a necessity for someone who is going through a divorce, needs to draft a will or is hit with a frivolous lawsuit? If Maine chooses to have a sales tax on legal services as proposed by the governor, it will be the only state in the United States to do so.

One of the stated goals of the plan is to export part of the tax burden to non-residents. If that’s the case, we aren’t we raising our lodging tax to the New England average? Why are we reducing the tax on short-term car rentals?

Our taxation system is a threelegged stool supported by the income, sales and property taxes.

The elimination of revenue sharing raises many more questions. Under this longstanding arrangement, the state returns a small portion of sales and income tax revenue to towns and cities, which allows local communities to maintain vital services like schools, road paving, firefighting and snowplowing while keeping property taxes in check. Ending this partnership, as the governor proposes, between the state and local communities shifts taxes to local property taxpayers.

I will keep asking the questions about this plan that I know you would ask: Is this good for the average citizen? Is it good for their kids? Is it benefitting the wealthy and corporations to the detriment of the middle class? What will tax breaks for those groups cost us in terms of investment in our future? Is it good for the future of the State of Maine? Let’s just hope we get some answers.

———

Rep. Denise Tepler (D-Topsham) is a first-term member of the House of Representatives who serves on the Taxation Committee.