Last October, Maine State Chamber of Commerce President Dana Connors went on a media tour attacking the upcoming Mainers for Accountable Elections referendum.
Specifically, he railed against the fact that an affirmative vote would give the Legislature absolutely no choice but to close tax loopholes for corporations in order to fully fund Maine’s Clean Elections system of public campaign financing.
“The language does not say you ‘may’ find $6 million. It says a legislative committee ‘shall’ find $6 million from ‘low performing’ incentives,” Connors wrote in an op-ed in the Bangor Daily News.
“There is a mandate, a requirement to permanently eliminate programs,” he told “The Morning News with Ken & Mike” on WGAN. “There is no choice.”
Connors and the chamber saw this tying of the hands of the Legislature as a terrible thing in large part because they subscribe to the extreme view that there is no money going to corporate tax breaks in Maine that could be better spent elsewhere.
Even the exhaustive investigative reporting by Press Herald reporter Whit Richardson showing how out-of-state scam artists bilked the state of more than $30 million through the New Markets tax credits program (money that remains un-recouped and would be far more than enough to pay for Clean Elections) doesn’t seem to have shaken their resolve.
Now that the voters of Maine have spoken and the referendum has passed, however, corporate lobbyists and their allies in the Legislature are singing a different tune. Suddenly, just a few months later, they seem to think that the mandate of the voters isn’t quite as binding.
Following the referendum decision, the six Democrats on the Taxation Committee found a corporate tax break to end to pay for the Clean Elections law. They voted to use language from a bill submitted last year (L.D. 341, An Act to Prevent Tax Haven Abuse), to stop allowing companies to avoid Maine taxes by moving their headquarters overseas. (Full disclosure: That bill was originally submitted by my brother, who is also my state representative, Orono Democrat Ryan Tipping-Spitz.)
The Republicans on the committee, despite the clear will of the voters, are refusing to close this, or any, tax loophole. Prodded by the business lobby, they voted instead to take the money directly from the state’s General Fund.
They’re basically insisting that $6 million that could be spent on education, health care, addressing Maine’s opioid epidemic or a thousand other worthy priorities instead be used to shield corporations from paying their fair share of taxes.
It remains to be seen which side will win out as the issue goes before the Appropriations Committee and the full Legislature.
This is a good example of the power and the persistence of the corporate lobby in Maine government. Even when defeated by referendum and when the Legislature is supposedly given “no choice” by the voters of Maine, they still find ways to stymie attempts to close the profitable loopholes they have written into our tax code.
It’s not just Republicans over whom the corporate lobby has sway.
On Thursday, the Maine Senate voted unanimously, under the hammer, to approve a full extension of the Maine Capital Investment Credit. This new tax giveaway, proposed by Gov. LePage, will cost the state $23 million. The vote came despite the fact that, unlike some other corporate tax expenditures, there’s not even a plausible argument that this measure will benefit the economy.
The program, modeled on federal bonus depreciation (though it’s not exactly the same, making tax returns more complicated rather than less) would provide state tax credits targeted to companies that purchased business equipment last year in excess of $2.5 million. It’s not even incentivizing future investment, just giving a handout based on money already spent.
“Even as a temporary incentive, bonus depreciation’s effectiveness is minimal at best,” wrote the Bangor Daily News in an editorial against the tax break.
And yet, a unanimous vote.
There’s still time to stop this tax giveaway. It goes next to the House and requires two-thirds approval to be passed as emergency legislation, so a strong minority of rational, budget-conscious representatives could prevent it from becoming law and redirect the funds to more critical priorities.
That debate will be a significant early test this session of where legislators stand: either with the people of Maine, who voted just three months ago to close these kinds of wasteful tax loopholes (and certainly don’t support new ones being enacted), or with the corporate lobbyists who seek to continue to profit from their abuse.
Mike Tipping is a political junkie who works for the Maine People’s Alliance. He can be contacted at:
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