(The Center Square) — Maine business leaders are calling on state lawmakers to reject a proposed wealth tax on the state’s top earners to plug gaps in spending, warning that it would hurt the economy and drive job creators to lower-tax states.
In an open letter to lawmakers, Maine Chamber of Commerce President and CEO Patrick Woodcock urged them to not to move ahead with provisions of the supplemental budget that call for a new 2% surtax on incomes over $1 million and tapping out the state’s so-called “rainy day” reserve fund.
“At a time when Maine should be focused on growing Maine’s economy by strengthening our business climate, encouraging investment, and supporting long-term growth, the budget will tax our job creators, depletes our budget reserves, and fails to enact the pro-growth tax policies to support research and development and reward hard-working employees here in Maine,” he wrote.
Woodcock said the governor’s budget proposal is “a laundry list of short-term populist impulses that collectively will undermine our state’s long-term economic growth.”
“As a result, the proposed surtax would increase the tax burden on job creators, reinvestment, and expansion,” he said. “This will slow economic activity, discourage capital investment, make Maine less competitive relative to other states and will directly impact Maine’s ability to attract and retain top talent in our state.”
The Legislature’s Democratic-controlled budget committee added the surtax in a change to the state’s two-year budget. The 2% tax would apply to taxable income above $1 million for single filers, $1.5 million for heads of households and $1.5 million for joint filers. The Legislature’s nonpartisan budget office said the tax would impact about 2,600 tax filers and rope in $150 million over two years.
Mills, who is seeking the Democratic Party’s nomination to run for U.S. Senate, initially opposed the wealth tax but said she agreed to support it in exchange for property tax relief in the spending plan, which is still being debated by lawmakers.
“It is crucial that we maintain these important investments for Maine people into the future, especially as we face such economic uncertainty because of actions of the Trump Administration,” Mills said.
But business leaders said the supplemental budget includes other items that raise concerns for employers, including a provision that calls for tapping $324 million from Maine’s Budget Stabilization Fund to help pay for Mill’s proposal to cut $300 “affordability” checks to taxpayers this year.
In his letter, Woodcock called the proposal “fiscally imprudent” and said it “prioritizes short-term relief over long-term economic growth.” He said the plan to raid the stabilization fund, also comes as legislative leaders have proposed rolling back tax incentives for businesses and doing away with a program that allows employers to deduct a portion of their property taxes for purchases.
“Maine needs to focus on economic growth, workforce development, and fiscal responsibility by maintaining a stable, predictable tax environment that supports businesses of all sizes and encourages investment across the state,” he wrote.
