It’s hard to imagine a worse thumping than what the Maine Republican Party endured last Election Day.
They not only lost the governorship and a seat in Congress, but they also lost control of the state Senate and a lot of ground in the House.
Don’t feel too sorry for them. Democrats may have won the election, but Republicans still have the upper hand when it comes to the war of words over taxes.
That was on display when Gov. Mills rolled out her budget proposal last week to a joint session of the Legislature. Mills said that she learned four things on the campaign trail last year: Voters want better health care, better schools and better economic opportunity, and they don’t want to pay any more taxes.
Mills said she was going to deliver just that – except that’s not really possible.
FALLING SHORT
The proposed budget does come through on health care, with mostly federal funds thanks to finally expanding Medicaid eligibility. But the additional $126 million over two years for school funding doesn’t come close to reaching the 55 percent mark that was mandated by the voters in 2004 and ignored by the Legislature ever since.
The budget makes some progress in helping people pay for higher education, increasing the tax credit for tuition, but it’s not the kind of investment that would make Maine stand out as a place that invests in its workforce.
It doesn’t do all of those things because of the fourth promise – no tax increase. You can’t afford to cover all the bases, let alone introduce any new initiatives, with the current revenue, and here is where Republicans have the upper hand. They have made taxes an issue that’s independent from the cost of running the government, and have convinced voters that they can have everything they want at the same low, low price.
Republicans say that there is an appropriate time to raise taxes, and that time would be never. But cutting taxes is always appropriate, whether the economy is growing or shrinking, even if reducing revenue prevents the government from doing its job.
In fact, the worse the government performs, the more they can argue that the whole thing is a waste of money. Providing health care or education is spending and needs to be tied to sustainable revenue. Tax cuts, on the other hand, cost nothing and never need to be paid for.
The Maine Center for Economic Policy, the liberal think tank, had its own budget proposal, which is quite modest in its goals. It would meet the state’s obligation to fund schools, restore the amount of money distributed to cities and towns to reduce property tax and increase the tax credit for low-income workers. To balance the budget, they recommend tax increases ranging from one-tenth of 1 percent on income over $100,000 to 1.8 percent on income above $489,000.
In a state where half the families make less than $56,000 a year, you would think that such a plan would have a lot of appeal. But touching tax rates is considered politically unwise.
You have to ask, what’s so special about these rates? They didn’t come down off the mountain with Moses. They were introduced by a one-time governor and current talk radio personality named Paul LePage, who came to office with Republican legislative majorities in 2011.
They cut the top income tax rate from 8.5 percent to 7.15 percent, and then cut spending in ways that forced cities and towns to raise property taxes. MECEP estimates that the state will take in about $880 million less over the next two years than it would have if the 2010 tax rates were still in place. So if Mills’ budget were to pass without any new taxes, expect to see continued pressure on middle-class property taxpayers to protect a small number of high earners from paying a little more.
PARTIAL HISTORY
Team LePage claims that history shows that their approach worked. When he took office, the state was in an economic mess: Unemployment was high, the Medicaid rolls had exploded and there was an $800 million budget shortfall.
Eight years later, unemployment is at a near-historic low and the state is running a surplus. That argument would sound better if you just got here from Mars and you didn’t know that Maine is one of 50 states.
Because if you know that, you should also know that just before the Republicans cut taxes, a global financial crisis tanked the economy here and everywhere. Every state had high unemployment, and every state saw an explosion in the number of people who qualified for Medicaid, the health care program for the poor.
Since then, every state has recovered (most more quickly than Maine), and it wasn’t because Maine cut taxes on high earners.
So why should Mills and the Democrats treat the LePage tax cuts with so much reverence?
Because even when Republicans lose an election, they keep winning the rhetorical war on taxes.
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