1. Garrett Martin and Joel Johnson 1/28/2015
Governor LePage’s Tax Plan: Background Briefing
Garrett Martin and Joel Johnson
1/28/2015

2. Summary Budget Impacts
The Governor’s plan is fundamentally a tax swap: income tax cuts for sales tax increases where the majority of the net benefits – in dollar terms – will flow to high-income households.
The Governor’s proposal “locks in” historically low levels of state revenue, crippling Maine’s ability to invest in education, health care, and local communities.

3. Sources of General Fund Revenue, 2007-2019
Pre-LePage Plan Revenue
Sources of General Fund Revenue,
Income Tax
Sales and Use Tax
Corporate Income Tax
Estate Tax

4. Sources of General Fund Revenue, 2007-2019
Pre-LePage Plan Revenue
Sources of General Fund Revenue,
Without 2011 Tax Cuts
Income Tax
Sales and Use Tax
Corporate Income Tax
Estate Tax

5. Sources of General Fund Revenue, 2007-2019
The LePage Plan Tax Swap
Sources of General Fund Revenue,
Without 2011 Tax Cuts
Income Tax
Sales and Use Tax
Federal = 38%
Individual Income Tax = 22%
Sales Tax = 14%
Other Revenue = 26%
Corporate Income Tax
Estate Tax

6. Sources of General Fund Revenue, 2007-2019
The LePage Plan Tax Swap
Sources of General Fund Revenue,
Without 2011 Tax Cuts
Income Tax
Sales and Use Tax
Corporate Income Tax
Estate Tax

7. Tax Cuts $690M $424M Tax Hikes Income Taxes -$610 Million
Estate Taxes -$37 Million
Corporate Taxes -$30 Million
Other -$13 Million
Tax Cuts
$690M
Tax Hikes
$424M
Sales and Use Taxes
Expansion +$128 Million
Rate Increase +$276 Million
Other + $20 Million

8. Tax Cuts
Tax Hikes
$424
Million
$690 Million

9. Tax Hikes + Property Tax Increases + Spending Cuts
Tax Cuts
$266M
$690M
$424M

10. General Fund + Revenue Sharing as a share of the economy
State Funding as a Share of the Economy is Already at Historic Lows
General Fund + Revenue Sharing as a share of the economy

11. General Fund + Revenue Sharing as a share of the economy
State Funding as a Share of the Economy is at Historic Lows and Going Lower
General Fund + Revenue Sharing as a share of the economy

12. Property and Sales Taxes Hit Low- and Middle-Income Mainers Hardest
10%
17%
23%
42%
32%
20%
63%
47%
45%
Bottom 20%
Middle 20%
Top 1%
Source: Maine Revenue Services Tax Incidence Study, 2009

13. I WIN!!!
Hmmm…
I may come out ahead too?!

14. Summary Budget Impacts
The Governor’s plan is fundamentally a tax swap: income tax cuts for sales tax increases where the majority of the net benefits – in dollar terms – will flow to high-income households.
The Governor’s proposal “locks in” historically low levels of state revenue, crippling Maine’s ability to invest in education, health care, and local communities.