One of the major accomplishments for Republicans during the second regular session of the 130th Maine Legislature has been the anticipated return of hard-earned tax dollars to Maine’s people, which are set to start arriving in June. This “Give it Back” initiative is one our caucus has been working on for the past 18 months, because we firmly believe that Maine’s overall tax structure as it stands is not in line with current economic realities.
In fact, the alarming inflation rates and labor force shortages we’ve been experiencing since last year have had major effects on the state’s revenue streams, especially our sales and income tax collections as prices and wages have risen. Both have been a source of record windfalls and undeniable uncertainty, the latter more so if we slip into a forecasted recession.
I’ll fully acknowledge this was a bipartisan effort – the supplemental budget cleared the Appropriations and Financial Affairs committee unanimously. And for an emergency bill such as a supplemental budget to take effect immediately after passage, it has to have a two-thirds majority in both chambers.
That’s not to say there weren’t some bumps along the way, which unfortunately stem from major philosophical differences in how our parties view tax dollars. A great analysis of this divide was the subject of an article in The Fiscal Times, where the author referenced the findings of Stefanie Stantcheva, an economist and Harvard University professor. Her paper, published in August 2021, examined how Americans think about taxes and broader fiscal issues related to fairness and the role of government.
While people of both parties share common ground on many issues, Stantcheva found the underlying reasoning regarding taxes; their behavioral and economic effects, and the way they’re perceived differ widely. Much of that gap results from how the government and its underlying role is viewed.
For Democrats, tax dollars are often thought of as the government’s regardless of their source, and are meant to be spent on any agenda or the latest topic they deem worthy. They further believe that income and wealth redistribution are components critical to social fairness and equity, irrespective of the personal efforts made by those who created it to begin with.
On the other hand, Republicans believe where tax dollars come from, and why, are just as important, and the government is simply the steward of those funds. Therefore, if the government is fully funded, any excess revenues should be returned to those who contributed it. If not, growing government in both form and function to a point that is unsustainable is the major risk.
According to the study, therein lies the real fundamental difference – it’s a binary choice where data doesn’t matter if the way of thinking about it is what ultimately drives policy decisions. It’s much like the legal profession, where six different lawyers could invariably give you six different opinions of the same statute.
Fortunately, we took a different approach this time around. While it was hard for some Democrats to accept the overwhelming fact that a $1.22 billion surplus – mind you, more than a quarter of our typical yearly budget – was simply too much to keep, they still tried to steer some of it away from those who earned it. Republicans held the line and even increased the qualifying income limits, ensuring that more Mainers who paid taxes would be getting some of it back. If you need help determining whether you qualify and what you need to do to get your $850 check, you can access our guide on our website.
While we were able to also enact some tax reform through increasing the exclusion for retirement income, there’s no doubt continued reform will still be a challenge as long as the ways we think about it differ so widely.
There is more work ahead, but rest assured that we will continue to advocate for you to keep more of the money you earn.
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