By Laurent F. Gilbert Sr
Mayor of Lewiston
Here we go again! Republican Governor Paul LePage’s administration is pushing on two fronts: the elimination of Maine’s Estate Tax and to have Maine’s Estate Tax conform to the Federal Estate Tax.
I share with you with permission a report from the Maine Center for Economic Police (MECEP) presented recently by their policy analyst to Maine’s Joint Standing Committee on Taxation:
Testimony Regarding LD 423 and LD 1147
“An Act to Eliminate Maine’s Estate Tax”
“An Act to Conform Maine’s Estate Tax to the Federal Estate Tax”
By Dan Coyne, Policy Analyst, Maine Center for Economic Policy
Senator Trahan, Representative Knight and distinguished members of the Joint Standing Committee on Taxation. Thank you for the opportunity to testify on LD 423, “An Act to Eliminate Maine’s Estate Tax,” and LD 1147, “An Act to Conform Maine’s Estate Tax to the Federal Estate Tax.” My name is Dan Coyne, and I am a policy analyst with the Maine Center for Economic Policy (MECEP). MECEP advances public policies that help Maine people prosper in a strong, fair and sustainable economy.
With this Legislature currently facing an $840 million revenue shortfall, now is not the time to pass these bills or any other that unnecessarily weakens the estate tax. Maine’s best hopes for quick economic recovery and prosperity requires maintaining critical investments in our people and quality of place, not in repealing progressive tax policies that help fund those core investments.
MECEP has three main concerns with any bill that attempts to weaken or repeal the state estate tax. First, the estate tax is a tax that is imposed on a very small number of very wealthy estates but which benefits all Maine people. Under current law, approximately 550 to 600 Maine estates are likely to be affected by current estate tax levels in 2013, the first year in which the LePage Administration has called for increasing the exemption level from $1 million to $2 million.
Yet, the estate tax raises significant revenue that benefits all Mainers, including those individuals fortunate enough to have accumulated sufficient wealth to have left an estate subject to possible estate taxation.
Estate tax revenues accrue to the General Fund, which supports core investments in K-12 education, higher education, health care, environmental protection and public safety. The estate tax raised $31.2 million in Fiscal Year 2010 and is projected to raise $43 million in Fiscal Year 2011. The loss of such revenue will likely force the state to cut vital services further. Such cuts threaten to shift costs to municipalities and property taxpayers, further amplify a growing trend of underinvestment in our people and infrastructure, and negatively impact job creation and retention measures. This will also diminish Maine’s chances at quick economic recovery.
Second, the out-migration issues raised by proponents of estate tax reform are overstated. The non-partisan Center on Budget and Policy Priorities (CBPP), a well-respected federal and state fiscal policy organization, noted that “studies find that estate taxes have a small effect on the residence decisions of the very wealthy elderly—few people are likely to be affected and the size of the effect is small.” As the author then noted, the corresponding impact on a State’s economy of such migration decisions is likely to be small.
The Maine State Planning Office (SPO) reached a similar conclusion in its 1999 report: “A Golden Opportunity II.” The SPO noted that “it was the belief of many at the beginning of this research that we were experiencing far more out-migration of retirees than in-migration. But in reality, the reverse is true! .From examining tax records of the more affluent retirees, we’ve found that the number of retirees moving into Maine is double the number moving out.”
Moreover, estate tax revenues have remained relatively stable over the last three years: $39.9 million in Fiscal Year 2008, $31.8 million in Fiscal Year 2009 and $31.2 million in Fiscal Year 2010. Migration effects do not seem to offset the revenue gained.
Third, the estate tax has a negligible effect on small businesses and family farms. According to the Tax Policy Center, only about 110 small businesses and family farms nationally would have been subject to the federal estate tax in 2011 at 2009 federal levels ($3.5 million exemption). It is largely a myth that the current estate tax harms Maine’s small businesses and family farms.
Because the estate tax is imposed on a few wealthy estates but benefits all Mainers through its funding of core infrastructure and other investments, the revenue gained is not offset by migration effects, and small businesses and family farms are largely unaffected, MECEP urges this Committee to reject any bill, including LD 423 and LD 1147, that weakens or repeals the estate tax. (This is the end of Coyne’s testimony.)
I think Coyne hit the nail right on the head when he said: “Such cuts threaten to shift costs to municipalities and property tax payers, further amplify a growing trend of underinvestment in our people and infrastructure, and negatively impact job creation and retention measures.”
LePage wants to cut a variety of taxes that favor the rich with the utopic thought that they will invest their savings and create jobs. We need only look at the Bush era tax cuts during his eight years and now the extension under Obama and we see what has resulted where we sit at 9.1% unemployment. Where are the jobs the tax cuts were supposed to create?
The State of Maine is losing tax revenue and now under LePage it wants to cut income tax, estate tax and other taxes which are forms of revenue; it causes layoffs at the state and municipal levels, cuts revenue sharing to municipalities, which again results in loss of jobs and causes municipalities to raise property taxes, which then impacts those least able to afford them, those on fixed incomes. It is a mere shifting of the burden on those least able to afford it.
In the meantime, our infrastructure is going to hell, and the future of our infrastructure is bleak at best. With an investment, it would create jobs and at least sustain our deteriorating infrastructure that is so desperately needed.
Have you noticed the terrible condition of our roads and bridges in this state? Why can’t we put people to work fixing them and stimulating our economy? No, instead we take care of Wall Street at the expense of Main Street, while those who got bailed out are now reaping their millions in bonuses. Where are the investments in our country that they were supposed to make?
Just this past week, LePage was pushing “right to work” legislation, which in effect is a union-busting bill. Over 600 Maine workers crowded the State House in opposition.
I testified against the bill and in a press conference prior to the hearing in front of the throng gathered there near the governor’s office, I was quoted by a number of news organizations as saying: “As politicians, we should be focused on creating jobs, not undermining the worker and making good-paying jobs harder to find and to keep.”
I was also quoted as saying: “Governor LePage, if it truly is about ‘people before politics,’ these are the people you need to be supporting.” Fat chance!
Unfortunately for the majority of us people of Maine, LePage has his priorities skewed! Yup, for him it is rich people before politics and then he can take his state pension in another three-and-a-half years and enjoy his home in Florida while the rest of us are left to undo the mess he will have created.
As a fellow Franco-American Lewiston native, it is obvious he has completely forgotten his roots. How sad! As a Franco-American myself, I am truly ashamed by his behavior, which is not reflective of our heritage.
See Mayor Gilbert’s personal blog at www.MayorLarryGilbert.com.