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Analyzing Governor LePage’s Tax Reform Plan Joel Johnson MECEP economist
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Current-Law Tax System Sources of General Fund Revenue, 2007-2019 Estate Tax Income Tax Corporate Income Tax Sales and Use Tax
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Current-Law Tax System Sources of General Fund Revenue, 2007-2019 Estate Tax Income Tax Corporate Income Tax Sales and Use Tax Without 2011 Tax Cuts
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The LePage Tax Plan Sources of General Fund Revenue, 2007-2019 Estate Tax Income Tax Corporate Income Tax Sales and Use Tax Without 2011 Tax Cuts
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The LePage Tax Plan Sources of General Fund Revenue, 2007-2019 Estate Tax Income Tax Corporate Income Tax Sales and Use Tax Without 2011 Tax Cuts
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Income Taxes -$610 Million Estate Taxes-$37 Million Corporate Taxes-$30 Million Other-$13 Million Summary of Tax Cuts in FY’19 -$690 Million
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Summary of Tax Increases in FY’19 +$424 Million Sales and Use Taxes Expansion+$128 Million Rate Increase+$276 Million Other+ $20 Million
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$690 Million Tax CutsTax Increases $424 Million
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$690M Income and Estate Tax Cuts Sales Tax Increases + Spending Cuts $424M $266M
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State Funding as a Share of the Economy is Historically Low General Fund + Revenue Sharing as a share of the economy
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Headed for Historically Low State Funding as a Share of the Economy General Fund + Revenue Sharing as a share of the economy
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Headed for Historically Low State Funding as a Share of the Economy General Fund + Revenue Sharing as a share of the economy
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Chronic Underfunding for Maine’s Roads and Bridges Will Continue Expenditures Needed to Maintain Safe Roads and Bridges vs. Revenues Cumulative highway fund deficit since 2007 > $1.2 billion
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Elimination of Revenue Sharing With Towns and Cities = Local Tax Increases + Local Spending Cuts
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Property Taxpayers Will Pick Up More of the Costs of Funding Education Minimum Statewide Mil Expectation Federal Recovery Act Funding Fills the Hole 1 Mil = $1 per $1,000 of value Someone who owns a $150,000 home will pay $150 more in property taxes for each additional mil
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Property and Sales Taxes Hit Low- and Middle-Income Mainers Hardest Middle 20% Bottom 20%Top 1% 42% 47% 10% 32% 45% 23% 20% 17% 63% Source: Maine Revenue Services Tax Incidence Study, 2009
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I WIN!!! I may come out ahead too?! Hmmm…
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Summary 1.The Governor’s plan sets Maine up for future fiscal crises, which will lead to deep cuts to education, health care, job training, and other foundational pieces of a strong, sustainable economy. 2.The Governor’s plan will increase inequality between people and communities. 3.The Governor’s plan does not export enough taxes to out-of-state residents, seasonal residents, and tourists.
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Joel Johnson jjohnson@mecep.org
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