Question 1 would have disastrous effect on Maine's economy

Like all of Maine’s candidates for governor, the Maine State Chamber of Commerce opposes Question 1 on the statewide ballot this November. Regardless of one’s view on whether helping senior citizens and the disabled with home care merits consideration, this question’s tax increase would have a disastrous impact on Maine’s economy. For that reason alone, it must be defeated.

First, it is important to mention that for decades, Maine has been working hard to improve its business climate, develop its work force, and be one of the best places to live and work in the country. We are seeing the results of the groundwork that has been laid over these decades to put our state and Maine people on a surer path to prosperity.

There is still work to do, but Maine is headed in a positive direction. The excitement surrounding business growth and the success of Maine people is evident across the state.

Question 1’s new tax would upend the work that has been done and set Maine’s economy back. It would drive hard-working people and job creators out of the state, discourage businesses from locating in Maine, make Maine one of the least attractive states to live and work in the country and drain millions of dollars out of Maine’s economy.

Question 1 would impose the largest tax increase in this state’s history. Maine would have the highest top tax rate in the country — higher than even California’s. More than 60,000 Maine families and 20,000 Maine businesses would be hit with this new tax.

Employers would pay 1.9 percent on employees’ earnings. Employees would pay 1.9 percent on top of that. Many Maine small businesses and the self-employed, some of whom operate on slim profit margins to begin with, are structured such that they would have to pay the full 3.8 percent tax on adjusted gross income on top of what they already pay in taxes. If Question 1 passes, these businesses would pay a higher tax rate than large corporations.

The vast majority of Maine businesses are small. Over 90 percent have fewer than 20 employees. Imagine what this new tax would do to the state’s economy.

A recent economic impact report from Maine’s State Economist warned that, “If adopted, the proposal would adversely affect several significant economic and demographic measures.” It predicted that, if Question 1 were to pass, Maine’s population, labor force and employment would drop markedly, and that personal income and state GDP losses would be significant.

Keep in mind that our neighbors in New Hampshire pay zero income tax. In Massachusetts, the tax rate for families in this income bracket is half what Maine’s would be. We would have a difficult time competing economically even in our own region, not to mention nationally or globally.

Question 1 and similar tax policies that have been considered in the recent past also lead to a sense of economic unpredictability about Maine as a place to live and do business. An unstable and unreliable tax climate harms Maine’s reputation nationally and is problematic for obvious reasons, especially at a time when Maine is making significant efforts to attract and retain employers and workers.

The potential negative impact of Question 1 is real. One recent college graduate said this tax and initiatives like it mean he is leaving Maine. He grew up in Maine, his family is here and he wants to stay, but the opportunities for financial success and the tax climate are better elsewhere.

Maine needs people like this young man to stay here, and Maine needs to attract more people like him who want to work hard and contribute to Maine’s economy.

Question 1, however, would send the message that Maine is a costly and unpredictable place to live, work and do business. Its new tax would devastate the economy and Maine businesses who are trying to succeed. It would drive away the professionals and employers the economy needs.

Great work is being done by public and private entities and partnerships and collaborations across Maine to make this state one of the best places to live and work in the country and a welcoming and supportive one. Let’s continue on that path.

To that end, please vote “No” on Question 1 on Nov. 6 to defeat this disastrous measure.

Dana Connors is president of the Maine State Chamber of Commerce.