It will be, over the next two months, the mother of all debates:
Should the powers that be in Augusta accept the will of voters, who decided in November to boost education spending via a 3 percent surcharge on taxable income over $200,000?
Or should they ignore the electorate and simply repeal it?
In this corner, we have those who say the people have spoken and, well, enough said.
In that corner, we have folks who argue that the poor voters knew not what they were doing, that the income-tax add-on will spell ruin for a state already on the economic ropes.
Then, way out there, we have Gov. Paul LePage. He just makes stuff up.
Monday evening, after a whirlwind day of bashing the education surcharge in Augusta, LePage headed all the way up to Fort Kent for a town hall meeting.
Among those waiting for him there was Chris Hallweaver of Van Buren, a smart guy with a smart question.
Now that Maine has a healthy surplus after years of whacking away at state government, Hall asked, why is LePage handing it over to the wealthy? Why squander the surplus on yet another proposed income-tax cut and repeal of the 3 percent surcharge, rather than invest back into the state’s economy?
Break out the number crunchers, folks. We’re going into the weeds.
LePage responded to Hallweaver that, thanks to last fall’s referendum, “anybody who makes $200,000 family income, in the state of Maine, pays 10.15 percent, the highest income tax.”
Countered Hallweaver, “No, that’s not correct, because 3 percent of that is only on the incremental revenue above 200,000.”
Advantage Hallweaver: Under the new law, the 3 percent surcharge applies only to taxable income over $200,000. Anything under that is subject to Maine’s pre-existing marginal tax rates, which top out at 7.15 percent.
Now, if we’ve learned one thing about LePage these past seven years, it’s that he’s never found himself in a hole he can’t dig deeper.
“It’s for the full $200,000. It’s 10 percent of the full amount, sir,” the governor retorted. “It’s not incremental, it’s the top dollar. Once you hit $200,000, you are paying 10. If you’re paid $200,001, you are paying 10.15 percent after your deductions. Sorry, that’s the way it works. That is the way it works.”
Sorry, Governor, but that’s not the way it works. And you either know that and are deliberately spreading falsehoods to further your political agenda or you have no business talking tax rates without a certified public accountant whispering in your ear.
LePage’s gaffe makes a huge difference:
The way he spun it on Monday, a Mainer with taxable income of $200,001 would pay 10.15 percent in state income tax on the entire amount. That translates into a whopping $20,300 tax bill.
In reality, however, that person would pay Maine’s marginal tax rates, up to 7.15 percent, on the first $200,000 – along with 10.15 percent on that extra dollar. That’s an estimated $13,192 in state income tax – plus a dime for that extra buck.
Meaning in this case, LePage overstates the surcharge’s impact by more than $7,000.
Hallweaver, in an interview Tuesday, also expressed dismay at LePage’s repeated claims that doctors, lawyers, scientists and other highly paid professionals are fleeing Maine in droves to avoid the 3 percent surcharge.
“In my office this morning, we had hundreds of letters that we gave to the press from the people that had left,” LePage told the crowd.
Hundreds of letters?
Try 37 – including 22 that were actually directed to the governor’s office and another 15 that were submitted to the Legislature as written testimony back in February.
And what exactly do these letters say?
Not one came from someone who actually has left Maine.
Six were from people who said they’re either planning to leave or at least thinking about it.
Eight more said they knew of someone either leaving or considering it. (One writer, for example, was told this by a stranger he met on a plane.)
Some of the remaining letters, while not announcing any moving plans, were nevertheless telling.
“I am tired of people who do nothing to improve their situation, dipping into the pockets of those that do,” complained a veterinarian in Scarborough. “It may be a small amount of luck that gets you ahead, but I’m sure you know that it is more about sacrifice. … I pay more taxes just by earning more money. FLAT TAX!”
A woman from Cape Elizabeth suggested that indentured servitude might balance the scales: “If we have to bear this burden, what are others’ forced contributions? Janitorial services? Volunteer time, maintenance? Nothing. The proverbial finger has been pointed at us while everyone else is clear of obligation. This is infuriating.”
(The proverbial finger? How about the actual finger that LePage & Co. have pointed at Maine’s poor for the past seven years?)
Then there was the widow from Wales who apparently thinks society’s obligation to public schools should fall primarily on those with school-age children.
“Many of us don’t even have children in this system and many have many children and get plenty of welfare,” she wrote. “Enough is enough for this small state.”
What makes LePage’s latest public relations blitz so unfortunate is that there is a legitimate debate to be had here over the 3 percent surcharge.
It was passed, after all, by voters who for more than a decade have watched the state renege on his statutory obligation to fund 55 percent of the cost of education statewide.
Were they hoodwinked, as critics now claim? Or were they simply fed up with a system that always seems to favor those lucky Mainers who live in the land of six (or more) figures?
At the same time, a smattering of the letters in LePage’s paltry pile, while not from professionals bidding Maine bye-bye, are from corporate executives who warn that the surcharge will make it tougher to attract highly paid employees and keep them here.
To be sure, these execs speak out of self-interest – assuming their taxable income falls somewhere north of $200,000. But they nevertheless deserve to be heard.
LePage could encourage this debate. Heck, in a perfect world, he could enhance it with real facts, real figures, maybe even real people.
Instead, he once again undermines it with claims that are blatantly untrue.
And he tops that off with an alleged mass exodus from Maine that’s heavy on fear and light on fact.
Mused Chris Hallweaver after the governor’s latest performance, “Very powerful stuff, fake news.”
Bill Nemitz can be contacted at:
bnemitz@pressherald.com
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