Lawmakers approve tax conformity bill, send it to LePage
The Maine Senate gave final approval Thursday night to a compromise bill that will align Maine’s tax code to federal tax changes enacted by Congress last December. The legislation was introduced earlier this year following a series of federal tax cuts adopted by Congress.
LD 1655, which also was approved by the House on Thursday, will now go to the governor for his consideration.
The Bangor Daily News reported that the bill approved by lawmakers is a more modest package than the sweeping tax-cut plan proposed by Gov. Paul LePage earlier this year. The BDN reported that Republicans and Democrats settled on a package that will cut state taxes by an estimated $22.2 million next year while conforming to federal tax changes. It includes a smaller corporate tax cut than LePage wanted, an expanded property tax credit, and a new family and medical leave credit, the newspaper reported.
The bill, “An Act to Update References to the United States Internal Revenue Code of 1986 Contained in the Maine Revised Statutes" passed unanimously in the Senate.
A news release from the Senate President’s Office stated that the tax conformity bill will make it easier for Maine families and businesses to file their taxes. If the Legislature had not acted on tax conformity, “all Maine taxpayers would have likely been required to file amended 2017 returns and businesses would have had to keep two sets of books, one for federal taxes and another for state taxes,” the news release stated.
“I am very pleased that we were able to get this done for the people of Maine and for the state’s small businesses,” Senate President Michael Thibodeau, R-Waldo, said in the release. “I would like to thank Sen. Dana Dow for his hard work as chair of the Taxation Committee. He waded through very complex tax policy issues and was able to bring all sides together to put forth a bill that will benefit all Mainers.”
Dow, a Republican serving Lincoln County, said: “This was by far our most important vote this year. I am proud that we were able to get all sides to the table, ultimately passing this tax-neutral legislation with unanimous votes in both chambers. All Maine taxpayers will benefit from tax conformity.”
Bill 'splits the difference'
The Maine Center for Economic Policy, an Augusta-based nonprofit, characterized the enacted bill as a compromise, stating in a news release that it “splits the difference” between “legislative Republicans, who backed Gov. Paul LePage’s plan to replicate President Trump and congressional Republicans' tax cuts for the wealthy and profitable businesses, and Democrats, who proposed policies to benefit low- and middle-income families.”
“The compromise contains elements of the Trump tax plan, but it rejects the worst policies proposed in Gov. Paul LePage's tax conformity bill — including expanded tax breaks for Maine's wealthiest estates, loopholes for businesses that make out-of-state investments, and giveaways to the state's largest profitable corporations,” MECEP stated. “At the same time, it expands the Property Tax Fairness Credit — a vital, income-based property tax relief program for Maine homeowners and renters.”
MECEP stated that the legislation will cost $26.8 million in this budget cycle — less than either the governor’s or the Democrats’ initial offerings.
"In the face of tremendous pressure to simply revise the state tax code to reflect the lopsided rewrite of federal tax law, Maine's legislators opted to chart their own course,” MECEP Executive Director Garrett Martin said in the release. “They rejected the worst policies handed down by Congress and proposed by the governor. And while the bill still contains some unnecessary and ineffective tax breaks for profitable businesses, the inclusion of an expanded Property Tax Fairness Credit will make a real difference for some of the low- and moderate-income Mainers left behind by the Trump tax cut.”
Martin added: “The Legislature also provided a meaningful lesson to future elected officials: No tax policy decision is a fait accompli. Maine always has a choice, and we should do whatever we can to ensure Maine's tax code works for the communities and families of our state."
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MECEP analysis of 2018 Tax Conformity Bill
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