Dems say unfunded GOP tax cuts deepen budget whole by $400 million
AUGUSTA – Democratic lawmakers on the State’s Appropriations and Financial Affairs Committee today said unfunded tax cuts that primarily benefit the rich have nearly doubled the state’s structural budget gap. The structural gap is the difference between projected state spending based on current law versus the projected state revenue for the next two-year budget.
During a meeting of the committee today, lawmakers were briefed on the $756 million structural gap by the LePage administration. The tax cuts last year that were passed by the Republican-controlled legislature contribute to $400 million of that gap.
“The tax cuts that primarily benefit the rich have doubled the structural budget gap and middle class families will have to pick up the tab,” Rep. David Webster, D-Freeport, who serves on the committee. “The Republicans promised these tax cuts would foster economic growth and pay for themselves, but now we see that promise is not bearing out.”
GOP tax cuts eliminated the state alternative minimum tax on individuals, lowered the top income tax rate in 2013 from 8.5 percent to 7.95 percent, doubled the estate tax exemption from $1 million to $2 million, and cut property tax relief to more than 75,000 low and middle income Maine families by 20 percent, as much as $400.
A middle class family in Maine can expect to get back around $123 in income tax cuts, while individuals making more than $350,000 will get back $2,800, according to data from Maine Revenue Services.
“This is a tax shift not a cut for most middle class families,” said Peggy Rotundo, D-Lewiston, the lead House Democrat on the committee. “We are seeing property taxes rise and more middle class families and seniors are struggling to make ends meet.”
A new report from the Maine Center for Economic Policy says the tax cuts will result in two in five families paying higher property taxes.
“We’ve heard promises that these tax cuts would create jobs, but instead Maine has lost 1,600 jobs and our economy slid backwards while other New England states emerged from the recession,” said Sen. Dawn Hill, D-York.