Monday, I had the pleasure — and I say that with a fairly substantial amount of sarcasm — of attending the public hearing that was being held on five bills that seek, in a variety of ways, to deal with the 3 percent tax surcharge passed by referendum last fall.
The Joint Committee on Taxation accepted public testimony for roughly six hours. The hearing room was so packed that those who wanted to testify were forced to sit in a spillover room. Anyone who didn’t arrive early to sign up could expect to be waiting for hours.
The bills are all different, of course. One offers a full repeal of Question 2 and argues that it is economically devastating, and that the education funding formula is a flawed, broken system. Another suggested that implementation be delayed a year, and the question be sent back out to voters. Another sought to make changes to the law so that S corporations and pass-through entities — essentially, businesses that route business income through personal income taxes, thus making filers appear wealthier than they actually are — were insulated from the tax hike.
But while the solutions offered to fix or repeal Question 2 were varied, there was an overarching theme that was contained in most of the testimony in support of those bills — preventing economic suicide.
Rep. Karl Ward, R-Dedham, who is the president of Nickerson & O’Day, a construction company headquartered in Brewer, explained to the committee why Question 2 was so damaging. “If this is allowed to become law, our business tax rate will be going up by a gargantuan 42 percent.”
Ward continued: “l am currently estimating that over the next five years, this will cost us nearly $300,000, not counting the untold lost opportunities caused by this. See this?” Ward then directed the committee’s attention to some design schematics. “This is a design for a planned expansion to our office … a $400,000 investment that will add three full-time employees if built. Now, it’s in the dumpster. l don’t dare to do it in this anti-business climate.”
Ward also told the committee that he knew several people that were planning to leave the state — including his college roommate, who is a 767 pilot for a major airline — as a result of this law’s passage.
His story was hardly unique. Person after person stood up and told the committee the same thing. Major employers. Small businesses. Individuals. All told the committee how disastrous the tax surcharge would be for Maine’s economy.
Sadly, the Democrats on the committee were frustratingly unsympathetic.
Co-chair Rep. Ryan Tipping, D-Orono, perhaps sensing the relative disgust in the room for his chairmanship, which is tainted by allegations of ethics violations, said absolutely nothing.
Sen. Justin Chenette, D-Saco, chimed in only occasionally, and each time it was only to make a snide, smug, self-satisfied acerbic remark meant to ridicule the person giving testimony, rather than engaging in a real dialogue.
Rep. Janice Cooper, D-Yarmouth, had apparently only one thing to say. She repeatedly asked many supporters of the bills, particularly business owners who were telling her to her face they were already having trouble recruiting talent to Maine, whether or not they thought good schools were helpful in recruitment, obviously suggesting that taxes didn’t matter.
Someone should politely inform Cooper that New Hampshire has good schools, as does Florida, Texas, Utah, Colorado, North Carolina and every other state that is fleecing Maine of its young, productive talent. And they all have lower taxes at virtually every level, as well as (usually) better weather, lower energy costs and a more robust workforce.
But I’m sure giving her affluent Yarmouth school system millions of extra dollars and many of the struggling, rural school systems next to nothing will get all those businesses and high-paying jobs to come here.
The only Democrat on the committee who seemed genuinely interested in a dialogue, even though she still clearly had a position, was Rep. Gay Grant of South Gardiner. She was inquisitive and skeptical, but seemed to be asking questions that at least sought to uncover more information about the rationale of proponents. She asked tough questions, but they were fair. Sadly, she was the exception rather than the rule.
At a time when Maine needs to be finding ways to attract wealth, growth and young productive talent, this 3 percent surcharge makes doing so far less likely.
To any neutral observer at Monday’s hearings, it would be clear that something has to be done to mitigate the damage done by Question 2. But I’ve never held my breath all that long waiting for such common sense in state government.
Matthew Gagnon of Yarmouth is the chief executive officer of the Maine Heritage Policy Center, a free market policy think tank based in Portland. A Hampden native, he previously served as a senior strategist for the Republican Governors Association in Washington, D.C.
