The single most important responsibility of the Maine Legislature is to enact policies that will help foster an economic environment that will encourage job creation and retention. That is why we have adopted significant health insurance, regulatory, tax, pension and welfare reforms. It is also why the Maine Senate passed legislation to use the growth in future revenues to reduce Maine's income tax level from 7.95 percent to 4 percent.
Recent editorials have been quick to dismiss our plan and the taxpayer concerns that generated it.
LD 849, "An Act To Provide Tax Relief for Maine's Citizens by Reducing Income Taxes," was hardly rushed; it has been proposed by Republican legislators for years. It has had numerous public hearings and public debates extending back to when Republicans were the minority party. Its implementation is the logical outcome of the voters' decision to change the direction of state government. Since we were given the opportunity to lead Maine in a new, more prosperous direction, it is reasonable to expect that we would follow through on our pledge to enact it.
We are committed to making state government more affordable. LD 849 sets a goal of gradually reducing income taxes paid by Maine citizens over time. It is only triggered when the economy improves, and there are extra revenues over and above the budgeted needs of state government.
Extra revenues go into a fund that is used to gradually reduce the highest income tax rates over time until the maximum rate is 4 percent. A similar version of our tax plan was enacted into law in 1995 when Republicans last held a majority in the Maine Senate, but was repealed by Democrats two years later.
Recently, former Gov. Angus King was asked by Pat Callahan of WCSH6: "What if anything would you like to do over?" He responded by citing late Senate President Jeff Butland's law to reduce the income tax rate over time with surplus revenues. Gov. King said: "We were afraid to do it because we were afraid it would create deficits down the road. It turns out we had four to five years of surpluses and we could have done it."
LD 849 operates with a spending cap that was signed into law by Gov. John Baldacci in 2005. It was done, in part, to address a $1 billion deficit that he inherited from Gov. King. When prosperous times return, LD 849 takes monies above the statutory spending limitation and returns them to taxpayers through gradual income tax rate reductions.
The major difference between LD 849 and the law we passed in 1995 is that it contains a target of 4 percent. That makes the bill harder to repeal. Opponents of this approach are concerned because it will limit their ability to take even more money from taxpayers to create new government programs.
Opponents of our plan attempt to link it to the unrelated Taxpayer Bill of Rights, or TABOR, proposals that sought to place limitations on the ability of the Legislature and municipal governments to increase taxes by requiring voter approval. LD 849 does no such thing. Rather, it sets a goal for state government, and only state government. Doing so will help us achieve an income tax rate that will support a more vibrant economy by encouraging people to reside in Maine year-round.
Voters gave Republicans the opportunity to lead Maine in the midst of the worst economy in generations. Year after year, state government has experienced annual shortfalls, and before Republican control, had been on course to create a society where more people receive from state government than contribute to it. We are keeping the promises that we made by implementing policies that have been part of our platform for years. LD 849 is one of them.
Finally, an editorial in another newspaper asserted that "cutting the top income-tax rate in half to 4 percent could be decades away." For the sake of our children and grandchildren, let's hope that is not the case. We are acting now to position Maine to be on the front end of the economic recovery when it comes. LD 849 is a responsible approach to creating future growth and opportunity for all Mainers.
Sen. Jon Courtney, R-Springvale, is the Senate Majority Leader. He represents Senate District 3 which includes parts of York County. He chairs the Joint Select Committee on Regulatory Fairness and Reform.