AUGUSTA — Lawmakers’ review of a proposal by Gov. Paul LePage to make Maine’s tax code conform with the federal tax law passed by Republicans in December has revived the debate about tax cuts in Maine.

LePage’s bill would return about $88 million to individuals and businesses who file taxes in Maine, but opponents of the proposal from the state’s Republican governor said most of those benefits, including a new estate tax exemption that would make the first $20 million of an inheritance tax free, are geared largely to benefit mostly the wealthiest Mainers or even out-of-state corporate entities.

Alec Porteous, LePage’s commissioner of the Department of Administration and Financial Services, told the Legislature’s Taxation Committee that conformity with federal law would help businesses while removing another 17,000 low-income families from the state tax rolls entirely.

And while some lawmakers and other advocates have said there is no need for lawmakers to tackle the issue this year and that it can wait until the next Legislature convenes in 2019, Porteous warned it would be unlikely to top the agenda of the next administration or Legislature.

“Indeed, this would be taking place during a period of time when the new administration is proposing its biennial budget package and legislative committees are reviewing and addressing the two-year state fiscal blueprint,” Porteous said. Any tax reform deliberations starting next January also would be difficult to enact in time for tax filing deadlines in April, Porteous warned.

Under LePage’s proposal, a portion of a state revenue surplus would be earmarked for families in the form of a child and dependent tax credit. The measure also extends tax benefits to businesses by allowing them to write off a larger portion of business investments while providing an average tax break of about $542 a year for a family of four earning $50,000 a year and a tax cut of about $467 a year for a family of four earning $90,000.

“Together, the two measures represent a pro-growth, recruitment and retention strategy for Maine of young professionals and families – effectively encouraging recent college graduates to remain in, or relocate to, Maine and then to settle here permanently and raise their families in our state,” Porteous said.

Opponents to the proposals, including those with the left-leaning Maine Center for Economic Policy, urged lawmakers to use any surplus to fund a voter-approved expansion of Medicaid and to gear tax relief at property taxes, which are hurting many of the state’s elderly living on fixed incomes.

“This legislation proposes over $88 million of tax breaks overwhelmingly benefiting wealthy individuals such as heirs with multimillion dollar estates and profitable corporations,” said Jane Gilbert a retired state employee from Augusta. “These are the same individuals and corporations that secured substantial tax breaks under the Republican tax bill passed at the national level. It is unconscionable that anyone would consider giving even more tax breaks to Maine’s wealthiest individuals and corporations when so many needs have gone unfulfilled in our great state.”

Sarah Austin, with the Maine Center for Economic Policy, told lawmakers that by forgoing additional state level tax cuts Maine would be in a position to fully fund its public schools, expand MaineCare, the state’s low-income health care program, to thousands more people, as well as make needed investments in public infrastructure.

“Or, we can continue to put those public goods and services further out of reach with tax breaks for those who are already prospering, and who just received a substantial windfall from federal tax reform,” Austin said.

Crunched for time as they head toward an April adjournment date in an election year, lawmakers on the committee offered mixed reactions to the bill, as they prepared for what would likely be multiple work-session meetings on the measure starting Monday at 1 p.m.

Rep. Matthew Pouliot, R-Augusta, said he realized there were many parts of the proposal that would not get the support of the full committee, but suggested some of the bill might have broader support.

“There are definitely parts of this bill that I think we would both agree should be considered, like the personal exemptions,” Pouliot said to Gilbert. He said the new tax credits for families were, “probably a good thing.”

“I think there are some aspects of conformity that are actually good for people who aren’t wealthy,” Pouliot said. “I would like to figure out how we could move forward on something, maybe, even if it’s not all of it.”

But Democrats on the committee, including state Rep. Gay Grant, D-Gardiner, said there a lot more questions that need answers. Grant said she had “probably 20 pages of questions” on the bill she hoped to get answers on during the upcoming work sessions on the measure.

Meanwhile, Democratic leaders at the State House also signaled Thursday the bill would face stiff opposition.

House Speaker Sara Gideon of Freeport said Democrats would not accept any proposal that could jeopardize the state’s economic recovery or working families.

“There is no requirement for Maine to automatically conform with any proposal from the federal government or this administration,” Gideon said in a prepared statement. “It comes with a price tag of nearly $90 million dollars, and it irresponsibly raids state coffers at a time we are seeing a systemic breakdown across nearly every department. “

Senate Minority Leader Troy Jackson, D-Allagash said, “Democrats are not buying it. We’re not interested in amending Maine’s tax code on behalf of large businesses, out-of-state corporations and a handful of wealthy individuals.”

Scott Thistle can be contacted at 713-6720 or at:

sthistle@pressherald.com

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