April 06, 2020

The start of a new year traditionally is the time to look back and to look ahead. As the Maine Legislature ponders what to do with the state’s $200 million-plus revenue surplus, it’s also a good time to look around.

Maine, you see, is not the only state enjoying a windfall. The surplus craze is sweeping the nation; the phenomenon of low unemployment, stable interest rates, nonexistent inflation and solid consumer confidence manifests itself from sea to shining sea and across the entire fruited plain.

Where Maine does stand alone, unfortunately, is in giving serious consideration to squandering its unanticipated riches on a sales-tax cut.

Take Massachusetts. Please. The Bay State racked up a $700 million surplus last fiscal year and, after spending some on one-time capital projects, promptly cut its income tax. This year’s bonus will be somewhat less, but the only argument is how much, not whether, the income tax will be cut again.

Iowa, a state knee-deep in common sense, is whacking its income tax 10 percent and expanding a tax break for small-business startups.

Montana is using its extra cash to let would-be homebuyers set up tax-free savings accounts to build nest eggs for their first homes.

California is setting up an income tax credit — that’s a full-blown credit, not just a measly deduction — for dependents. Wisconsin is giving married couples a tax credit of up to $304 a year to help offset the so-called “marriage penalty” built into the tax code. Michigan is raising its personal exemption and the exemption for children, expanding a tuition tax credit and increasing its deduction on earnings from interest, dividends and capital gains.

And so on. The methods vary, but the trend elsewhere is to put money back into the pockets of wage-earners, to help families raise and educate their children, to encourage home-owners, entrepreneurs, investors and savers. If other states had property tax systems as sick as Maine’s, chances are they’d be spending some money on remedies. Only here, apparently, is a tax cut favoring those, including tourists, who buy expensive non-essentials getting serious consideration.

Those pushing for the penny or even the half-penny sales tax reductions can’t even make a case that Maine consumers are unfairly burdened at the cash register. Our six-cent tax is found in eight other states, six states have higher sales taxes, 13 are just a penny or less lower. Maine does not tax groceries. Fifteen states do.

During the break between sessions, the move to cut the sales tax by a penny gained considerable momentum. While it’s discouraging to see so many legislators jumping on the wrong bandwagon, it is heartening to know that so many are eager to give $120 million back to the taxpayers. Now, as lawmakers reconvene, they just need to figure out a way that better helps those who need it. And if they need a hint, all they have to do is look around.

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