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Out to lunch
BY AL DIAMON
Letís compare the new report by the Speakerís Advisory Committee on Tax Reform to the diet of the average Maine adolescent.
The former will increase taxes. The latter will increase cholesterol.
The former will make us poorer. The latter will make us fatter.
The former will give us fits. The latter will give us zits.
Fortunately, we donít have to choose between them, since the state Legislature is dealing with both problems this session, increasing the likelihood weíll end up with empty wallets and spotty faces.
Actually, Iím in favor of both tax reform and bacon double cheeseburgers. But for the former to succeed, it must cut fat, while the latter has to have lots of it. Neither the speakerís committee nor the legislative health freaks seem to grasp either concept.
The committee, appointed by former House Speaker Mike Saxl, is recommending the state expand the sales tax to cover currently exempt services such as haircuts and funerals, entertainment spending such as ski and movie tickets, and purchases by nonprofit organizations. In all, over 20 new types of transactions would be subject to the five-percent tax, although the committee decided not to tamper with the exemption for lawyers and accountants. For some reason, the lawyers in the group (former Governor Ken Curtis, former state supreme court Chief Justice Dan Wathen) and the accountants (state tax assessor Tony Neves) overlooked that lucrative possibility.
In addition, the tax on restaurant meals would jump from seven to eight percent, and the levy on hotel rooms would climb from seven to 10 percent. The tax on beer and wine is also slated for a hefty hike.
The plan would generate new revenues of about $250 million a year. Roughly a quarter of that sum ó $62.5 million ó would be paid by tourists, leaving a net tax increase on Maine residents of $187.5 million.
The committee wants to use some of the new cash to cut the upper bracket of the state income tax from 8.5 percent to eight percent. That will save us a few bucks.
A taxpayer with an adjusted gross income of $35,000 would reap a tax break of $92.50, almost offsetting the additional sales tax that person would pay of around $156 a year.
But wait. There are other tax breaks in the committeeís plan. The property tax on business equipment would be eliminated. That saves, well, letís see, nothing, because our average taxpayer isnít a business. Come to think of it, even if he or she is a business, itís still no help because companies are already reimbursed for much of that expense by the state. (In some cases involving tax-increment financing, businesses are even reimbursed twice. Eliminating this tax may end up costing them money.)
The proposal also calls for increased aid to low-income people to pay property taxes or rent. That doesnít do much for average taxpayers (who get a smaller break), although it could be said the entire tax plan moves most of us closer to qualifying for poverty status.
Overall, it appears the committeeís proposal isnít designed to reform taxes so much as it is to increase revenues. A real reform package would have put the bite on lawyers and other professionals. It would have increased the threshold at which Maine taxpayers reach the income taxís top bracket from $16,500 to something realistic, such as $50,000. It would have provided a stable funding source for schools to take pressure off the property tax. And, most importantly, it would have reduced the overall tax burden on average citizens.
Instead, what we have is a thinly disguised tax hike, designed to provide funding for new programs.
Which brings us back to chubby teenagers. State Representative Sean Faircloth of Bangor has introduced a package of weighty bills designed to reduce our childrenís daily intake of empty calories. Schools would have to eliminate soda vending machines, fast-food restaurants would have to post nutritional warnings, the state would have to study how to teach kids to lead healthy lifestyles, and municipalities would have to convince people to avoid driving.
If all this became law, there would be some savings. For instance, police would no longer have to arrest Greenpeace demonstrators who surrounded McDonaldís customers in the mistaken belief they were beached whales.
On the other hand, if everybody started eating wheat germ and cauliflower, sales at fast-food joints would plummet. If everybody was obsessed with exercising, nobody would be caught dead buying a movie ticket. If we all walked or biked instead of taking the car, auto sales would tank.
Before long, tax revenues would be running well below projections, and the state would have a financial crisis that would make the current $1.2 billion shortfall look as miniscule as my budget for Spandex biking shorts.
Obviously, there are great risks associated with both tax and lifestyle reform. So Iíll be taking precautions.
Give me a loaded pizza, a large beer and a ticket to Daredevil.
Fried at my opinions? Shake me up by emailing firstname.lastname@example.org