Democrats want delay in Maine income tax cuts

AUGUSTA, Maine (AP) -- Democratic legislative leaders in Maine on Wednesday called for a delay in tax cuts that were enacted last session, saying it's needed to balance a $6.3 billion, two-year budget without shifting tax increases to property taxpayers.

Backed by about 50 Democratic lawmakers in the State House Hall of Flags, House Speaker Mark Eves and Senate President Justin Alfond of Portland said the tax cuts passed in 2011 are not paid for and should be delayed for another budget cycle in order to balance the budget that must be passed by June 30.

Not doing so and leaving intact a proposed two-year suspension of revenue sharing would cause a shift of $424 million from the state to with towns and cities, said Eves, of North Berwick, citing figures from the Maine Municipal Association. The figure closely mirrors the cost of the tax breaks, Eves said. High-income earners are among those benefiting from the tax breaks, which were pushed by Gov. Paul LePage and the Republicans.

"That's why more than 60 towns and school districts have signed resolutions against the LePage budget," said Eves. "Governor LePage passed the buck for cities and towns to our working families. The question before us is not whether we raise taxes or not, but instead, will he raise taxes on working middle-class people, on our seniors, on small businesses. Or can he simply agree, right now Maine cannot afford a tax break that was not paid for."

Republicans accused the Democrats of trying to undo the largest tax cut in Maine history, one they said primarily benefits low and middle-income earners and removes more than 70,000 low-income residents from the tax rolls altogether. Senate GOP Leader Michael Thibodeau of Winterport said it was "unfortunate the Democrats would hold a rally to announce they're going to raise taxes."

Sen. Roger Katz of Augusta, the assistant Senate GOP leader, said many of the Democrats who were now protesting the tax cuts voted for them after they were included in the budget in June 2011. Katz said Republicans have been waiting since January to hear the Democratic plan to balance the budget, and it turns out to be a tax increase.

"And it's ironic because there's not a word here of cutting anything in state government," said Katz, adding that the Democratic plan puts a new $400 million tax on Mainers by delaying the tax cuts.

LePage is not opposed to budget changes, provided they don't raise taxes, said spokeswoman Adrienne Bennett.

"He is open to (legislators) moving things around and keeping the budget revenue neutral," Bennett said.

The budget exchange comes up as the Taxation Committee plans a Thursday work session on a bill calling for a historic overhaul of Maine's tax code. The bill advanced by a bipartisan group of lawmakers dubbed the "Gang of 11" would increase Maine's sales tax from 5 percent to 6 percent and do away with dozens of exemptions, slash the individual income tax in half, to 4 percent, and eliminate nearly all deductions from income.