The recent failed attempt by the Maine Legislature to enable a 3 percent surtax on the wealthy of Maine, as requested by Maine citizenry, is hardly surprising. Even less surprising was the nonsense strum und drang for and against the proposal – “Oh my God, it will drive away all of the job creators” or “The rich need to pay their fair share!”
These and similar arguments are about as deep and nuanced as a puddle in a parking lot. Many of the wealthy who live in Maine are not residents. Moreover, only a small minority of these well-off folks are dumb enough to pay any tax on income that approximates their fair share. Something else is needed, and that something else is a tax on residential mansions.
We can probably generally agree that if a Maine resident who makes over $200,000 in net income per year is faced with an additional 1, 2 or 3 percent state tax on income, that resident will likely consider some alternative to residing in Maine.
On the margin (as the Austrian economists say), a number of residents might even consider moving away. Others who may have considered taking up residency could have second thoughts. More probably, wealthy Mainers were long ago advised by their tax lawyers to domicile in Florida or Texas – two states with no income tax. Live in Maine; have a condo in West Palm Beach; enjoy the cash!
Last year I was hitchhiking from Portland to Rockland and a young fellow from Kennebunk picked me up in Brunswick. During the course of our conversation, it became clear that he was your standard Maine guy. He had three jobs to make ends meet. One of his occupations involved the opening and closing of a mansion in Kennebunkport for a wealthy man and his family from away.
They visit the mansion one day a year. They come for Thanksgiving Day dinner. He mentioned that the manse had a living room with a glass floor whereby you could watch the waves crash against the rocks below. It safe to say that this wealthy man was not a job creator, nor did he have any commitment to locals or anybody else in Maine.
My young friend didn’t mention where the wealthy fellow was domiciled. He wouldn’t have known whether the fellow was raking it in from the ever-so-fashionable carried interest tax dodge. Nor would he know if the man was laundering his cash through the infinitely malleable City of London. He could have had a convenient hidey-hole in a New Zealand shell corporation – who knows? Of course he could be anonymously buying expensive art and stashing it in a climate-controlled warehouse in Zurich. Tax-loss carry-forwards? Small potatoes for the rich! In the immortal words of that famous dog-lover Leona Helmsley: “We don’t pay taxes. Taxes are for the little people.”
In the summertime, I like to lounge around off the coast of Maine in my small craft. I am continually amazed at all of the lovely houses of the well-to-do in every nook and cranny of the coast.
Even more astonishing, these mansions with their nicely tended grounds are rarely occupied before the Fourth of July and are abandoned by Labor Day at the latest. It occurs to me that the summer occupants of these mansions may well be domiciled in Dallas, Texas, and their properties listed as being owned by a shell corporation in Bermuda, but the properties will not escape the eagle eyes of the Hancock and Lincoln county tax assessors.
We’ve all been pearl-clutching over the shutting down of state government, and who will pay the absolutely required tab of educating the children of Maine. Meanwhile, a perfectly acceptable solution to this problem is staring right at us.
The owner of the ancient shingle mansion on Mount Desert Island will not be decamping with his summer house in the face of a tidy little mansion tax – it’s simply a cost of doing business. The summer family with their compound on Pemaquid Point will not be re-domiciling in Sarasota when faced with a new state mansion tax. They will only too happily pay the bill and be back in Philadelphia on Sept. 5. And our Thanksgiving Day visitor to Kennebunkport with his glass floor? It’s my guess that his tax accountant will barely take notice of the new Maine state mansion tax.
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