The New Year offers an occasion to reflect on the past 12 months, and look forward to what 2016 has to offer.
Maybe you made a resolution. Maybe you didn’t. Either way, you probably didn’t spend a lot of time thinking about how the changing calendar would immediately save you money.
That makes sense. The bipartisan budget deal — and the included tax cut that is already putting money in your pocket — is, at this point, old news. It dominated headlines for a while in 2015, but everyday Mainers have moved on with their lives.
But the deal will have big effects on you in the coming year. There are a lot of details, and it is easy to get into the weeds, but here is the takeaway: effective Jan. 1, taxes — especially income and property taxes — will be cut for the vast majority of people in Maine. More than eight out of 10 Mainers will see their overall tax burden go down. Even better, we did it without compromising funding for our schools, our roads and bridges or our most needy.
Gov. Paul LePage deserves some of the credit; He re-started our tax reform conversation last year with a bold plan to fundamentally change the way our state approaches taxes. Unfortunately, that plan would have broadly increased taxes on many Maine people to pay for big tax cuts for the top 10 percent of earners in this state.
I have long known Mainers wanted tax reform, but also knew they deserved better than what Gov. LePage had offered. That is why our deal provided a $135 million tax cut, with the bottom 90 percent of earners receiving more than three-quarters of the benefits.
Here at home, when I ask people about their taxes, I hear one thing over and over, loud and clear: property taxes are too high. That is why we lowered your effective property tax burden by doubling the homestead property tax exemption. This popular program provides a substantial tax break to Maine homeowners who live here.
Gov. LePage had proposed doing away with the program entirely for anyone under the age of 65. While helping our seniors is critical, we know that all Mainers — not just our elderly — need property tax relief. This year, we are getting it.
We made our income tax more progressive by tweaking the brackets, doubling the standard deduction, and making tax credits for low-income families fully refundable. That is a lot of jargon, but what it means is simple: Smaller income tax bills and larger refund checks.
We also made military pensions 100 percent exempt from state income tax. This is a small but important way to honor our servicemen and women, and it is one I was proud to support.
Lastly, we adjusted our sales tax system to export taxes to tourists and visitors to our state. We made small increases to the tax on hotel rooms, restaurants and auto rentals that will largely be paid by visitors to our state.
Maine’s natural beauty and outdoor activities attract more than 25 million out-of-state and international visitors every year. Exporting a small amount of our tax burden to them means more tax relief for full-time Maine residents.
On the Taxation Committee, I am faced every day with questions about how to make our tax system better for Maine families. I can tell you that these reforms amount to one of the best deals Mainers have ever gotten, even if they have faded from the headlines. It is an achievement I am proud to have been part of.
Sen. Nate Libby serves as the ranking Democratic member of the Taxation Committee and represents the city of Lewiston in the Maine Senate.
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