A BETTER
DEAL FOR
MAINE

LOWERING PROPERTY TAXES & INVESTING IN OUR FUTURE

The 127th
Maine Legislature

 MAINE FAMILIES DESERVE A BUDGET
THAT PUTS MORE MONEY IN THE
POCKETS OF WORKING MAINERS AND
INVESTS IN OUR ECONOMIC FUTURE.
THE BETTER DEAL FOR MAINE PRIORITIZES TAX CUTS
FOR THE MIDDLE CLASS AND SENIORS, LOWERS PROPERTY TAXES FOR ALL MAINE HOMEOWNERS AND INVESTS IN OUR SCHOOLS, WORKERS AND COMMUNITIES.

2

A Better Deal for Maine

 Content

A Letter to Maine Taxpayers

4

Who Benefits?

6

Facts in Numbers

8

How Does Our Plan Stack Up?

10

How This Impacts the Average Mainer

12

Appendix: Dollars and Sense

14

Lowering Property Taxes & Investing in Our Future

3

 A LETTER TO MAINE TAXPAYERS
As the top Democratic leaders in the Legislature, we are offering a counter
proposal to Governor Paul LePage’s budget. Our Better Deal for Maine is a
win for Maine families. It grows our economy from the middle out, by putting
more money in the pockets of working families and investing in our economic future.
The Better Deal for Maine prioritizes tax cuts for the middle class, lowers
property taxes for all Maine homeowners, and invests in our students, workers and communities. It does so by asking nonresidents, the wealthy and
corporations to pay their fair share. Unlike the Governor’s proposal, the Better Deal for Maine is fully paid for and balanced now and into the future.
While Democratic leaders commend the Governor for initiating a muchneeded conversation about tax reform, his budget takes Maine in the wrong
direction. Maine’s economy lags behind the nation in job growth and wages.
His budget will make it worse.

4

A Better Deal for Maine

 Our Better Deal for Maine
is a win for working families. It prioritizes tax cuts
for the middle class. It lowers property taxes for all
Maine homeowners and it
invests in our schools, communities and economic future.

The Governor’s plan puts tax breaks for Maine’s wealthiest individuals and
corporations ahead of tax cuts for working class families and will result in increased property taxes. It shortchanges investment in schools, public safety, transportation, job training, health care and other foundational pieces of a
strong, sustainable economy. Elsewhere in the United States, we have seen
these kind of top-down economic policies result in fiscal crisis and deep cuts
to schools.

The Governor’s plan puts tax breaks for Maine’s
wealthiest individuals and corporations ahead
of tax cuts for working class families.
Maine families deserve a better deal. Democrats look forward to working with
our Republican colleagues and the Governor to do what’s best for Maine families and our economy. We want to hear from you, so please join us in town halls
and forums across the state or contact us directly at the State House.

Rep. Mark Eves
Speaker of The House

Rep. Jeff McCabe
House Majority
Leader

Rep. Sara Gideon
Assistant House
Majority Leader

Sen. Justin Alfond
Senate Democratic
Leader

Sen. Dawn Hill
Assitant Senate
Democratic Leader

Lowering Property Taxes & Investing in Our Future

5

 WHO BENEFITS
The Better Deal for Maine is a win for Maine families and our economy. It puts
more money in the pockets of working families. It lowers property taxes for all
Maine families and invests in our schools and workers by asking the wealthy and
corporations to pay their fair share.
If you are a young family or a senior struggling to keep up

cuts to vital local services like police, fire and public works.

with rising property taxes, our deal is better for you: The Bet-

It increases funding for revenue sharing to $80 million each

ter Deal for Maine cuts property taxes by $120 million annu-

year while rejecting taxes on non-profits.

ally for Maine residents by doubling the Homestead Exemption for all Maine homeowners and increasing the Property

If you work hard and are simply trying to save for retirement

Tax Fairness Credit by more than $57 million per year.

or maybe just the next family vacation, our deal is better for
you: The Better Deal for Maine cuts income taxes by hundreds

If you are a parent, a student, or a worker, our deal is better

of dollars for the vast majority of Maine families while asking

for you: The Better Deal for Maine invests in our economic

the wealthiest 5 percent to pay their fair share.

future by bolstering investment in Maine schools, students
and workers.

If you are small business owner, our deal is better for you:
The Better Deal for Maine asks corporations to pay their fair

6

If you live or work in rural Maine, our deal is better for you:

share and levels the playing field by no longer allowing large

The Better Deal for Maine prevents property tax hikes and

corporations to hide their money in offshore tax havens.

A Better Deal for Maine

 A Better Deal:
for young familes and seniors

The LePage budget cuts taxes for large corporations and the wealthy by
eliminating proprty tax relief for young families and seniors. The Better
Deal for Maine lowers property taxes for all Maine homeowners by $120
million per year.

for students and workers

Governor LePage’s budget abandons investment in our schools, students
and workers. Our Better Deal for Maine invests in public education from
pre-kindergarten through high school, college and job training programs,
ensuring economic success for our students and workers, and setting the
state on the path for a stronger economic future.

for Maine communities
Governor LePage’s budget eliminates funding for revenue sharing that
supports fire, police, and public works in Maine communities. The Better
Deal for Maine keeps the state’s promise and increases funding for revenue
sharing for local services like police, fire, and public works.

for Maine’s middle class

Governor LePage’s plan gives the largest tax cuts to Maine’s wealthiest
residents. The Better Deal for Maine targets income tax cuts to middle- and
low-income Mainers. The Governor’s plan gives 50 percent of income tax
cuts to the top 10 percent. Under the Better Deal for Maine, 98 percent of
income tax relief goes to the bottom 95 percent.

$

is fully paid for
Governor LePage’s budget sets Maine up for a fiscal crisis and will leave a
$300 million hole in the budget that will lead to deep cuts in education. Our
Better Deal for Maine is fully paid for and is fiscally responsible.

Lowering Property Taxes & Investing in Our Future

7

 FACTS
IN NUMBERS

$120

$80

$20

MILLION

MILLION

MILLION

A YEAR IN DIRECT

A YEAR FOR

MORE EACH YEAR

PROPERTY TAX

LOCAL FIRE, POLICE

FOR

RELIEF

AND PUBLIC WORKS

K-12 EDUCATION

Our plan builds the economy from the middle out. It is built on the fundamental
belief that if you create more opportunity for people, they will have a greater
chance at success. If you put more money in the pockets of working families,
they will spend it locally at our businesses and grow our economy. It is simple
middle-class economics. Our targeted tax cuts are paid for and won’t create a
huge $300 million budget hole in the future. The Better Deal For Maine rejects
the failed policies of trickle-down economics that gives more money to people
who don’t need it while crippling our ability to invest in the very things that lift
up families, like schools, job training and health care.

8

A Better Deal for Maine

 98%

GOES
TO

THE BOTTOM

95%

OF INCOME TAX

OF ALL

RELIEF

TAXPAYERS

$191

Avg of
tax cut for
middle class

The Governor’s plan is a giveaway of
$10,000 on average to the top 1%. The Better Deal targets tax cuts to middle- and lowincome families and asks the wealthy to pay
their fair share.

Up to

In direct property tax relief for
seniors under the Property
Tax Fairness Credit.

On Average

More in the pockets of homeowners compared to the LePage plan.

$1,500
$300

*Homestead Exemption calculated by the average mill rate

Lowering Property Taxes & Investing in Our Future

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 HOW DOES OUR
PLAN STACK UP?
Middle
Class
Tax Cut

Property
Tax
Relief

Under the Better Deal for

Our plan increases direct prop-

We avoid property tax hikes by The governor’s plan raises the

Maine middle class familes

erty tax relief for Maine Fami-

increasing revenue sharing to sales tax to 6.5%. Under The

will, on average, see a larger

lies by $120 million per yer.

$80 million per year while re- Better Deal for Maine, we keep

overall tax cut.

Increase
Revenue
Sharing

jecting non-profit tax.

Lower
Sales
Tax

the sales tax at 5.5%.

Middle Class Economics vs. Trickle-Down Economics
The Better Deal for Maine builds on Governor Paul LePage’s tax reform plan, but targets it more towards middle income
families. It rejects the failed top-down economic policies that give tax breaks to the wealthy and corporations at the expense of the rest of us.

The Better Deal for Maine grows the economy using proven economic strategies of investing in our people and our communities to create more opportunity for Maine families. By putting more money in the pockets of working Mainers and
making smart investments in our students and workers, we can grow good jobs and strong wages in our state.

10

A Better Deal for Maine

 LePage Plan

A Better Deal for Maine

Income tax relief

50% of income tax relief goes to the top 10%

98% of income tax relief goes to the bottom 95%

Sales tax rate

Increases sales tax rate to 6.5%

Keeps sales tax rate the same at 5.5%

6.5%

Keep current rates at 8%

8%

Adopts LePage Plan at 8%

Broadens number of items subject to sales tax

Adopts the LePage Plan

Meals
Lodging
Sales tax base

Sales tax fairness credit

Creates a refundable tax credit from $250$500 to offset the sales tax increases

Adopts the LePage Plan

Homestead Exemption

Doubles for elderly. Eliminates for under 65

Doubles exemption for everyone, not just elderly

Property Tax Fairness Credit

Expands credit that offsets high property taxes

Adopts the LePage Plan

Provides $62 million in revenue in FY16;

Increases funding for revenue sharing to $80 million

eliminates it in FY17

in FY16 and FY17

Revenue Sharing

Estate Tax

Non Profit Tax

Corporate Income tax

Increases exclusion amount in 2016 and eliminates estate tax in 2017
Requires municipalities to tax non-profits on
property greater than $500,000

Reduces rates

No change to current law

Rejects taxes on non-profits

No changes to current rates. Closes loophole on
offshore tax havens

Exempts military pensions from income tax and

Exempts military pensions from income tax and

increases exemptions for non-military pensions

maintains current law on other pension exemptions

Telecommunications tax

Transfers tax collection to the towns

No changes to current law

Tobacco

No changes to current law

Equalizes tobacco taxes for all tobacco products

Pensions

Lowering Property Taxes & Investing in Our Future

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 HOW THIS IMPACTS
THE AVERAGE MAINER
Fairness. Opportunity. Success.
These are the principles and values that define the Better Deal for Maine.
Whether you are a single mom, a family of four, or a retired couple, your
family will see a bigger benefit under the Better Deal for Maine. It will
put more money in your pocket, while also investing in our schools, our
people, and our communities.
The Governor’s plan helps those that need it the least -- the most.
The Better Deal for Maine builds for our future and builds our economy
from the middle out-- not the top down.

12

A Better Deal for Maine

 MARRIED WITH
TWO CHILDREN

Annual income of $100,000

Total Tax Reduction: $608
Beats LePage Plan by $406
Assumptions:
Home Value: $175,000 with a mill rate of 15
Itemized Deduction: 15 percent of income

SINGLE MOM
WITH ONE CHILD
Annual income of $30,000

Total Tax Reduction: $177
Beats LePage Plan by $183
Assumptions:
Renter: $1,000 per month
Standard Deduction

RETIRED COUPLE
OVER 65
Annual investment income of $10,000 and
$30,000 in Social Security

Total Tax Reduction: $194
Beats LePage Plan by $248
Assumptions:
Home Value: $150,000 with a mill rate of 20
Standard Deduction

Lowering Property Taxes & Investing in Our Future

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 APPENDIX-

DOLLARS AND SENSE
Individual Income Tax: Like the LePage Plan, the Better Deal replaces the current system, in which the top bracket kicks in at a low income level,
with a truly progressive rate and bracket system. It broadens the income tax base and simplifies the income tax by eliminating itemized deductions, as
proposed by the Governor. It also adopts the LePage Plan to create a new credit for medical expenses. It eliminates the income tax on military pensions as proposed by the governor. Overall, these income tax changes provide an income tax cut for the bottom 95% of taxpayers, on average. The
income tax will keep the current rate for the top 5% of taxpayers, on average, while eliminating deductions. It increases fairness in Maine’s tax system
and provide substantial tax relief for the vast majority of Mainers while costing the state far less than the LePage Plan would.

Individual Taxpayer

LePage Plan (FY’16)

LePage Plan (FY’19)

Better Deal (Fully Phased In by FY’17)

Bracket / Rate

Bracket / Rate

Bracket / Rate

$0/0

$0/0

$0/0

$9,700 / 5.75%

$9,700 / 5.75%

$5,200 / 6%

$50,000 / 6.95%

$50,000 / 6.5%

$25,000 / 6.5%

$175,000 / 5.75%

$50,000 / 7.50%
$150,000 / 7.95%

Standard Deduction

$6,200

$6,200

$9,000

Standard Deduction Phaseout

None

None

$50K to $75K

Personal Exemption

$3,950

$3,950

$3,950

Personal Exemption Phaseout

None

None

$75K to $125K

Pension Exclusion*

$15K

$30K

$10K

Fiscal Note (FY17)

-$418MM

-489MM

-$120MM

* The table above is for single filers. For married filers, multiply the brackets, standard deduction, and standard deduction
phase out by 2; for head of households, multiply by 1.5.

Refundable Sales Tax Fairness Credit: The Refundable Sales Tax Fairness Credit is a critical mechanism to offset the impacts of broadening sales
taxes for low-income Mainers. The Better Deal adopts the Governor’s proposal for a refundable sales tax fairness credit. The total value of the credit
is estimated to be $71 million in FY 2019.
Refundable Property Tax Fairness Credit: The Property Tax Fairnes Credit is important to restore targeted property tax relief that was lost with the
elimination of the Circuit Breaker program. It is the best way to target property tax relief directly to Maine residents based on ability to pay. The Better
Deal adopts the Governor’s proposal to increase property tax relief under the Property Tax Fairness Credit by $58 million annually.

Current Law

LePage Plan

Better Deal

Threshold

6%

6%

6%

Reimbursement Rate

50%

100%

100%

Max Credit nonelderly

$600

$1,000

$1,000

Max Credit Elderly

$900

$1,500

$1,500

Max Benefit Bases

$2,000/2,600/3,200

$3,000/4,000/5,000

$3,000/4,000/5,000

Income Phaseout Starts

$13,333/23,333/33,333

$33,333/50,000/66,666

$33,333/50,000/66,666

Income Phaseout Ends

$33,333/43,333/53,333

$50,000/66,666/83,333

$50,000/66,666/83,333

Total Amount (Annual)

$35MM

$93MM

$93MM

Fiscal Note (FY17)

$0

-$58MM

-$58MM

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A Better Deal for Maine

 Homestead Exemption: The Homestead Exemption is important to any plan to export tax burden to out-of-state residents. The LePage Plan cuts the
Homestead exemption overall, whereas the Better Deal doubles the Homestead Exemption for all Maine homeowners.
LePage Plan

Better Deal

Nonelderly Exemption

$0

$20K

Elderly Exemption

$20k

$20K

Total Amount (Annual)

$17MM

$57MM

Fiscal Note (FY17)

$12MM

-$29MM

Revenue Sharing: Increases funding for revenue sharing to 2.5% to nearly $80 million per fiscal year.
LePage Plan
Total Cost (Annual)

.

Better Deal
$0

$77MM

Corporate Income Tax: The Better Deal makes no changes to the corporate income tax rate compared to current law. The plan does close the door
on offshore tax haven loopholes. Fiscal impact: $5MM per year.
Estate Tax: The Better Deal makes no changes to current law.
Telecommunications Excise Tax: The Better Deal makes no changes to current law.
Tobacco Taxes and Equalization: The Better Deal plan equalizes taxes on all tobacco products. Fiscal Impact: $7MM per year.
Sales and Use Taxes: The Better Deal adopts the LePage plan to expand and modernize the sales tax base. However, the Better Deal proposes
maintaining general sales and use tax at the current 5.5% rate, a 15% reduction compared to the LePage Plan. The Better Deal keeps taxes on restaurant meals and lodging at current law, 8%.
LePage Plan

Better Deal

General Sales and Use Tax Rate

6.5%

5.5%

Meals Tax Rate

6.5%

8%

Lodging Tax Rate

8%

8%

Rental Car Tax Rate

6.5%

10%

Service Provider Tax Rate

6%

6%

Base Expansion (FY 2017)

$119MM at 6.5% rate

Approx. $100MM at 5.5% rate

Revenue Impact in FY 2016

$227MM

Approx. $160MM

Revenue Impact in FY 2017

$389MM

Approx. $240MM

Lowering Property Taxes & Investing in Our Future

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 A BETTER
DEAL FOR
MAINE

Prepared Jointly by the Democratic Offices of the Maine Legislature
For more information please call 207-287-1300