PORTLAND — The Maine Green Independent Party announced Tuesday that it would support Republican efforts on a people's veto of a tax package passed by the Legislature and signed into law by Gov. John Baldacci in June.
Green party leaders said they oppose the tax restructuring because they believe it hurts lower-income Mainers and makes the state's system less progressive. In particular, Greens pointed to the elimination of state income-tax brackets and the application of sales tax on services such as car repairs.
"The new flat tax, in association with new taxes on services such as auto repair, represents a regressive tax system that favors the wealthiest few to the disadvantage of low- and middle-income Mainers," Anna Trevorrow, Green Party chair, said in a written statement.
House Majority Leader John Piotti, D-Unity, the sponsor of the tax package, maintained Tuesday that the restructuring will help Mainers financially, stabilize the state's revenue streams and create a more progressive tax system.
"When all is said and done, every income group sees a reduction in their tax burden, but lower-income people see a greater reduction in their tax burden than upper-income people," Piotti claimed.
Charlie Webster, chairman of the Maine Republican Party, said Tuesday that the move by the Greens didn't surprise him. Several Greens have contacted organizers of the signature drive seeking to put the veto question on the June 2010 ballot, Webster said.
And Green leaders have spoken with Sen. David Trahan, R-Waldoboro, who is leading the veto effort.
"If you go out and you talk to what I call the working class, regular people, I've never seen so much anger," Webster said.
Ben Chipman, chair of the Cumberland County Green Independent Party, acknowledged that the new tax system uses a system of credits to remain progressive, but he contended that those would help Mainers only when they get their tax refunds.
"It's nice to have credits and rebates and things like that. Our concern is how much money are people getting each week in their paycheck, so they can make their expenses, so they can live," Chipman said.
Piotti said the credit system doesn't work like that.
"The credits don't kick in at the end of the year. Your taxes will be set by those credits and your amount of (paycheck) withholding, from Day One, will be determined by the credits," he said.
An analysis by Maine Revenue Services concluded that 87 percent of Maine's 665,000 income tax-paying households would see their overall tax burden decrease.
The package will replace Maine's four income tax brackets, which top out at 8.5 percent, with a flat 6.5 percent rate for households that earn less than $250,000 a year, which includes the vast majority of tax filers. Incomes above $250,000 will be taxed at 6.85 percent.
The law seeks to recoup the loss in income tax revenue by broadening the state's 5 percent sales tax to a wide number of services never taxed before, such as some amusements, transportation, labor on car repairs, and other goods and services.
The 75 percent of Mainers who now take the standard deduction will instead take a "standard credit," said Piotti. He said that "will exceed the benefit you would have gotten from your standard deduction, and make up any difference that you would have received from the bracketed system."
Taxpayers who itemize deductions on the state level, Piotti said, will have a state-level credit that builds off a percentage of itemizations on the federal return.
Chipman said the Greens believe the bracketed system should have been retained, but adjusted, having the various brackets kick in at higher income levels.
"We're all for tax reform if it's done right," he said.
In the release, the Greens said they would launch a "No Flat Tax for ME" campaign to raise awareness of their concerns with...
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