Maine Tax Shift to be on Ballot in November

On the ballot this November in Maine will be a proposal to assess a surcharge of 3% on the income tax returns of households that make over $200,000 a year. All the money raised (estimated at $157 million) would go to funding public education, therefore lowering local property taxes.

In 2004 Maine voters approved a ballot initiative that stated that the state would pay for 55% of public education. That figure has never been met. Currently Maine is paying for 47.5%. The purpose of the surcharge would be to allow the state to fund public education fully at the 55% level.

Stand Up For Students is the organization spearheading this campaign. Volunteers  collected the needed 75,000 signatures in just three months. In contrast, a ballot measure backed by the Maine Republican Party and Governor Paul LePage to eliminate the income tax and cut public assistance programs, which was launched at the same time, fell far short of its signature goals.

This is similar to the NH Tax Shift Plan which would establish 3.75% income tax and provide over $400 million in property tax relief and $400 million in business tax reductions.

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Palm Beach Fire & Rescue Wants a Tax Shift

In 2009, the Florida legislature passed a law that allows county and municipal fire departments to reduce property taxes by the same amount generated by a sales-tax increase. Such tax shifts require the approval of voters through a referendum.

Now the Palm Beach Fire & Rescue want to ask the voters to raise their sales tax from 6% to 7% in order to fund needed purchases and maintenance, thus lowering their property taxes.

They are running into a difficulty in that Palm Beach County also wants to raise the local sales tax by a percentage point. This is also allowed by Florida law. All but 11 counties in Florida have a local 1% sales tax.

Nobody thinks it is a good idea to raise the local sales tax by 2 percentage points.

Stay tuned to see who wins the fight over this tax shift.

Texas Public Policy Foundation Calls for a Tax Shift

The Texas Public Policy Foundation recently called for shifting some of their property tax burden to a sales tax.

“Texas’ harsh property tax climate is creating serious financial hardship for homeowners and businesses all across this great State,” said James Quintero of the Texas Public Policy Foundation. “And without reasonable limits on how fast property taxes can grow, the problem only gets worse by the day. Local property tax bills continue to soar past sound economics. From 2000 to 2013, research shows that local property taxes rose by 101 percent, yet population and inflation grew just 70 percent.”

Does that sound like New Hampshire?

“The property tax is an unfair and inefficient way to fund government,” said economist Dr. Art Laffer. “Texas would gain hundreds of thousands of new jobs and tens of billions of dollars in personal income just by abolishing the property tax and replacing it with a revised sales tax.”

Don’t forget that a federal judge has ruled Texas’ school finance system unconstitutional because of the disparities between property-rich and property-poor districts.

Nebraska State Senator Proposes Tax Shift to Lower Property Taxes

Nebraska State Senator Mike Gloor has proposed a tax shift for that state in order to lower property taxes. Although it does not lower property taxes as much as the NH Tax Shift Plan, it is a step in the right direction.

Senator Gloor proposes raising Nebraska’s cigarette tax $1.50 a pack. That would raise $90 million which he says would go towards property tax relief. The increase would set their cigarette tax at $2.14 per pack. New Hampshire’s tax is $1.78.

Connecticut Tax Panel Recommends a Tax Shift

In the spring of 2014, the Connecticut legislature created the State Tax Panel to examine the state’s tax policy. It was charged with evaluating its structure and administration with particular focus on efficiency, equity, reliability, economic development and simplicity.

Almost two years later, it has completed its task.

Of particular interest to us here in New Hampshire is what they said about property taxes. Property taxes, they said, were:

  • Regressive
  • Not equitable
  • Detrimental to the state’s economic competitiveness
  • Not levied equally among municipalities

They recommended a Tax Shift.

Raise the existing sales tax from 6.35% to 7.35%. This would raise $600 million. Take that money and send it back to the cities and towns to lower property taxes. This would result in a 7% decrease in property taxes across the state.

This is very similar to the NH Tax Shift Plan.

If Connecticut can do it, why can’t we?