Yes, taxes matter
On Monday, I had an opportunity to spend two hours with the Democratic candidates for governor, co-hosting a radio forum on Portland’s Newsradio, WGAN.
As a conservative, you can imagine that I didn’t agree with a lot of what I heard. But it was a question I asked about taxes that sent my head shaking the most.
It is a critical subject for Maine’s next governor to address.
In 2016 we saw a referendum question that raised the income tax in Maine to more than 10 percent. This year, we are seeing yet another. Even without these additional tax hikes, Maine’s 7.15 percent top rate is still among the highest in the country.
Perhaps in other states, that might not be as big of an issue, but Maine is in a unique and very problematic place.
At this point it is almost cliche to point it out, but next door is New Hampshire, which has neither an income tax nor a sales tax, and we also have an incredibly large number of retirees who spend time in Florida, which has neither an estate tax nor an income tax.
If you like the northeast and want to start a business, New Hampshire means more capital to invest, and more money to attract good employees.
If you are an elderly Maine resident sick of five months of winter, Florida means more money for your retirement, and more money to give to your children and grandchildren when you pass on.
We are losing not only the wealthy, but increasingly the middle class. These tax implications make just as much sense to the family that buys a trailer in Florida as one that buys a mansion. When they move, Maine loses out both financially and in human capital.
Thus my question to the Democrats: First, is Maine’s tax rate too high, too low, or just right? Secondly, do you believe that this tax flight happens, and is it a problem?
Betsy Sweet was dismissive of the problem, suggesting that there are many retirees moving to Maine because of quality of life. She also said that most rich people don’t pay income tax, which is utter nonsense.
To her credit, though, she did propose a tax change that would drop the top rate to 4 percent and end all exemptions. Not that I believe for a moment that is where that rate would end up were she governor.
Mark Eves ducked answering the question of whether or not he supports a higher tax rate at that moment, but throughout the rest of the forum he called for it to be higher several times. He also said, “we want to make sure we get all the revenue that we can.”
Diane Russell not only said that people didn’t move to Florida because of taxes, she also said that if they did it was “fine” to lose people “at the top.”
Mark Dion said, “Most of the Democrats I talk to don’t have financial advisers,” completely missing the fact that those people are leaving in droves, too, and that even if it was only the wealthy, it still has massive implications for state policy.
Janet Mills was the only candidate who admitted that people do, in fact, leave the state due to our tax environment, though it didn’t seem to alarm her much.
No one truly seemed to take the problem seriously. And it is a problem.
I graduated from high school in 1999, and nearly all of my friends have abandoned Maine in favor of Texas, Florida, North Carolina, Virginia and countless other states.
They didn’t leave because they hated Maine. They left because they could get a better-paying job elsewhere, the cost of living is lower and they get to keep more of what they earn.
Think about it. If you are offered a job somewhere that gives you a pay increase over what you make here, and the state government takes none of your paycheck, do you really think that somebody my age in a middle-class job, struggling to get by, wouldn’t take that opportunity?
These things matter. Taxes matter. They matter to a 28-year-old engineer who graduated from the University of Maine and is offered good jobs in a number of places. They matter to retirees looking to enjoy their golden years and plan for their children’s future.
Despite this, Maine continues to make the decision to leave easy. And every single one of the Democrats seems to be not only fine with that, but happy to make it even easier.
Matthew Gagnon of Yarmouth is the chief executive officer of the Maine Heritage Policy Center, a free market policy think tank based in Portland. A Hampden native, he previously served as a senior strategist for the Republican Governors Association in Washington, D.C.