Corporate Tax

Maine’s proposed corporate tax break can be higher spent on different priorities, proponents say

A proposal by Governor Janet Mills to cut $ 82 million from this year’s budget to fund a new tax break for profitable businesses should be better spent on education, healthcare and other government services, economists, working groups and Mainer say find it difficult to recover from the pandemic.

Republicans and corporate lobbyists, including those of the Maine State Chamber of Commerce and the National Federation of Independent Businesses put pressure on the governor Comply with federal tax laws and exempt from income tax on loans obtained through the Federal Paycheck Protection Act. Businesses are allowed to write off expenses already made with PPP funds, so the loan amount is also deductible, which some have described as a “double tax break”.

In response, Mills changed her position and is now campaigning against her own budget proposal, which was released last month. Andy O’Brien, director of communications for the AFL-CIO in Maine, described the move as a “den” for business interests.

While Republicans want a full write-off, Mills urges “Partial Compliance,” which enables companies to write off profits of up to $ 1 million PPP deduction. According to Mills’ plan According to the Maine Center for Economic Policy (MECEP), an estimated 99 percent of PPP recipients would qualify for the double tax break.

Some Mainers who have paid attention to the debate are concerned and have called their representatives to encourage them to oppose Mill’s plan.

“I spoke to Senator Eloise Vitelli about it,” said Susan Lubner from Bath. “I told her that I thought the bigger companies should pay taxes on their profits while the smaller companies weren’t making profits, just trying to stay alive. She told me they were going in that direction somehow. “

Lubner is a yoga instructor and has struggled to retain customers during the pandemic. She said she did not get a PPP loan and instead waited many weeks last spring for the state employment office to process claims for self-employed workers.

Lubner said she was disappointed to learn that Democrats didn’t push Mills to better target small businesses that are likely to need more support. “It seems really unfair,” she said. “Unemployed people have to pay taxes on their unemployment.”

While many small businesses in the state benefited from PPP grants, data from the US Small Business Administration was released late last year shown that large corporations such as retail chains, law firms, private schools, hospitals, large manufacturers, and real estate developers received millions of dollars in loans.

Another dollar “not available for really urgent needs”

Mario Moretto, MECEP’s communications director, said it was inadvisable for lawmakers to consider a new tax break that would disproportionately benefit companies that were most profitable during the pandemic, while elsewhere there was significant need for that money .

“I think the key question is: In a state that is still affected by a pandemic, in which almost 50,000 Mainers are still unemployed and in which difficulties with hunger and housing insecurity continue to be felt on many levels, the should State do this use public funds to give new tax breaks to companies that have benefited from the pandemic? “Asked Moretto. “Every dollar that goes into this new tax loophole for businesses that were profitable during the pandemic is a dollar that isn’t available to meet the really pressing needs of families and communities.”

State revenue forecasters are Predictions A drop in revenue of $ 255 million for 2021 and $ 395.8 million for the 2022-2023 budget. Mills’ two-year budget proposal maintains the LePage-era tax cuts that benefited businesses and the rich. Without new revenue, there is concern that other needs will not be prioritized or funded.

Jeff McCabe, director of policy and legislation for the Maine Service Employees Association, said there are a number of ways the proposed $ 82 million tax break could be better spent.

Years of low wages and overwork have led to vacancies in many government agencies. The $ 82 million, McCabe said, could be used to repair some of the damage that was done in previous budgets. “We see the cake get smaller,” he said. “This is something that has now happened for the third administration.”

“I know our case workers in child protection services are dealing with work fatigue during the pandemic,” he continued, noting that in January government officials who were in contact with the public, including workers in child protection services, lost theirs Hazard allowance.

Other areas that are still under-financed by the state are the mandate approved by the voters to finance 55 percent of the K-12 schools and the statutory distribution of income to 5 percent with cities in order to relieve the local budgets. Mills’ budget proposal is insufficient to fully fund any of these mandates.

Not all Democrats support Mills’ tax proposal

Last week, Mills’ proposal was passed by the Legislative Tax Committee with the support of all but one Democrat, Senator Ben Chipman of Portland, the committee’s Senate chairman. It is to be adopted by the Budget Committee in the coming days.

Not all Democrats, however, agree with the governor’s plan.

“That $ 80 million can be spent on either the PPP exemption or some of these other programs,” said MP Seth Berry (D-Bowdoinham). “There are so many health and welfare programs taking care of our most vulnerable people, our seniors, our disabled people, and many of them are very underfunded and in dire need of an infusion of cash. I want to encourage the sharing of income among the municipalities, the exemption of homesteads, what we used to call breakers – the credit for the fairness of the property tax. That way we can make our economy fairer and incredibly important in a pandemic like this. “

“It’s a bad situation,” said MP Grayson Lookner (D-Portland). “We tax other forms of federal income like social security and unemployment. Why is PPP different? “

He said lawmakers need to look for new sources of income, not new tax breaks.

“I really think the state needs to look at other sources of income,” said Lookner. “Why weren’t there any tax increases for the richest percent of Mainers in the discussion? We can really close the gap if we had a fair tax structure in the state, but we may be putting a burden on our Medicaid and Medicare beneficiaries here. “

Rep. Joe Perry (D-Bangor), who sits on the Tax Committee, initially refuted the claim of Republicans who hit PPP recipients with an additional tax burden. He said companies that used the loan appropriately shouldn’t have any surprise tax concerns. But Perry was one of the Democrats on the committee who voted for the governor’s proposal to allow a $ 1 million withdrawal.

“I don’t think either of us felt great about any of our decisions, but we settled in with a million dollars behind the governor,” he said.

Other Democrats on the tax committee defended the vote, saying the write-off will help Maine’s struggling small businesses.

“Small and medium-sized businesses are the backbone of the Maine economy. Because of that, the Tax Committee voted to give them the tax breaks that help keep them open, ”said Mo Terry (D-Gorham), Chairman of the Committee House, in a statement. “We cannot allow our rest to rest on the back of the working people. So we agreed that companies could only write off the first million dollars. That means every PPP recipient gets help, but larger companies that are more profitable pay their fair share of the taxes. “

This narrative is flawed, said Moretto, because the tax cut brings the most benefit to the most profitable companies. Small businesses that have made losses or have struggled to make a profit only need to reduce a small amount of tax liability.

Many of them profitable companies belong Car dealership chains like Lee Auto Mall, legal and lobbying firms like Pierce Atwood, real estate developers like Avesta Housing, and large real estate managers like Port Property Management.

“The Chamber of Commerce did a really good job of seeing this as helping small businesses,” said Moretto. “But this tax loophole has nothing for the companies that have suffered losses. If lawmakers want to help small businesses that are really in trouble, we support it, but that is not the way to go. “

Photo: Gov. Janet Mills speaks as she signs a 2019 paid time off bill with Dana Connors, President of the Maine Chamber of Commerce, left. | beacon

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