AUGUSTA – Republican leaders in the Maine Legislature today unveiled a budget proposal that significantly reduces the income tax burden on all Maine citizens, keeps the current sales tax rate of 5.5 percent in place with no expansion of taxable items, and protects programs to help low-income Mainers.
The Republican leaders’ plan reduces the income tax burden on Mainers by approximately $380 million over the next two year budget cycle, while keeping the current revenue sharing rates to municipalities the same.
Under the Republican proposal, the highest marginal tax bracket would not kick in until $50,000 in taxable income, which would create a significant tax cut for Maine’s middle class.
Other highlights of the proposal include:
• Keeping itemized deductions
• Lowering the corporate tax rate
• Exempting military pension income tax
• Safeguarding tax exemption for non-profits
• Keeping Homestead property tax exemption
• Mirroring the Governor’s plan to eliminate the estate tax
Republican leaders said they believe that this proposal is a solid framework to build the necessary support from both parties to pass a two-year budget.
Senate President Michael Thibodeau (R-Waldo) said, “This is a commonsense proposal that I believe will have strong support in the Legislature. Mainers deserve tax relief, and a simplified tax code. This plan does not include complicated bureaucratic rebate programs. Instead, it allows Mainers to keep their money without having to apply for it by filling out a form and waiting for their check to arrive.”
House Republican Leader Ken Fredette (R-Newport) said, “We fully support our Republicans on the Appropriations Committee as they work through a complicated process of putting together a state budget. We share in the Governor’s vision of a Maine with no income tax, which is why we signed on to his constitutional amendment to eliminate it by 2020. This proposal provides a road map toward achieving that long-term goal.”
Senate Majority Leader Garrett Mason (R-Androscoggin) said, “This tax proposal shows that legislative Republicans are committed to the principles we campaigned on. We remain devoted to ensuring that Augusta is as inconsequential in Mainers’ lives as possible.”
The two-year budget proposal is in the hands of the Legislature’s Appropriations and Financial Affairs Committee. In order for it to take effect, it needs two-thirds approval of both the Maine Senate and House of Representatives.
The Legislature’s statutory adjournment date is June 17, 2015.