Eighty-two million dollars is a lot of money. For a state ravaged by a deadly pandemic, this could be a lifeline.
Mainers who have lost their jobs or homes could now desperately need that kind of support. So could small businesses that barely keep their doors open. This also applies to schools and educators in Maine who teach our children in unprecedented conditions. This also applies to cities in Maine that are forced to cut their budgets.
And there are new priorities that have grown massively in importance over the past year. Eighty-two million dollars could be used to repair our public health infrastructure, improve COVID testing, and provide better PPE to help defeat the now mutating virus. It could connect large swathes of the state to reliable broadband internet or expand childcare for working parents.
Instead, at the urging of some of Maine’s most shameless corporate lobbyists, Governor Janet Mills is proposing to take $ 82 million out of the budget and give it to profitable companies in a tax break.
Struggling companies left behind
That is exactly what Mills suggests. Don’t believe for a second the lies of the Republican legislature that Maine small businesses need this money “to keep their doors open and keep people busy”. If a company is really breaking break even now, it won’t see a penny of this proposal.
The tax break enables profitable companies to double their taxes. Companies that have already managed to get a grant from the federal government’s paycheck protection program that they then spent tax-free on wages and benefits can again use the amount of that grant as a deduction from their year-end profits, reducing their corporate tax liability by up to $ 1 million.
Companies that barely get around get only pennies from this proposal. Those who have made no profit at all and who hurt the most, are left completely in the cold.
The bad tax policy is advancing
You might think that such a persistent policy, which is completely contrary to the needs of the present moment, will be immediately rejected by Maine’s lawmakers. You would be wrong. It is not only taken into account, but also accelerated. On Tuesday, seven Democrats, who make up the majority of the tax committee, voted to forward the proposal to the budget committee, which will consider it in the coming days.
Proponents of this tax break have argued that Maine must give away this dual benefit, and in part equate to a federal tax break, as that was closer to the intent of Congress when they passed the PPP. But that’s ridiculous. Other states are not compliant, and Maine never honored any federal tax breaks, even under former Governor Paul LePage.
And if that’s your argument, what about the intent of the people of Maine who voted twice in referendum for the state to fund 55% of local education? This requirement was ignored in Mills’ budget. How about the law that Maine legislature passed last session that funds city revenue sharing at 5%? Also ignored.
Even if the intent is to amplify the effects of pandemic aid, how about unemployment benefits, rent relief, or student loan cuts, all of which – unlike the PPP grants – are fully taxed?
If the intent is to help small businesses, give it to them, not large, profitable companies.
Knuckling under only intensified the Republican attacks
This proposal is not just a terrible policy. It’s terrible politics too.
In advocating so much for partial “compliance,” Mills has vindicated and anchored the Republicans’ formulation of this problem and the lies they tell about its implications. She gave them a rhetorical stick to beat the Democrats with.
If the government and its legislature allies thought handing over to the Chamber of Commerce would prevent their opponents from attacking them, they were wrong. The ink wasn’t even dry in Mills’ press release when House Republicans issued a statement advising them that they hadn’t gone further. Mills’ own arguments claimed that Democrats select winners and losers by capping deductions to $ 1 million and ignoring “thousands of workers and the families who depend on them.”
The next day, former Governor LePage, who plans to run against Mills next year, used his Maine People Before Politics political vehicle to blow up Mills to “take money from companies hurt by the pandemic,” and they paradoxically beat for irresponsibly raiding the Rainy Day Fund to pay for the tax break she proposed.
Even if the Democrats turn to Republicans on this issue and take a totally amoral tax cut on the state’s most profitable corporations, they should at least seek something in return, such as funding actually intended to support families, workers, or workers in Maine small businesses.
If you speed up Mills’ proposal, you will take it out of the normal budgeting process and off the negotiating table, which will make it much more difficult to include your own priorities in the final biennial budget.
It’s not over
Fortunately, there is still time to turn this ship around. Democrats in the legislature should refuse to be deterred by these false attacks. Now is the time to stand up and publicly stand up for the priorities you and the people of Maine share: Health Care, Education, Defeat COVID; no further tax breaks for profitable companies.
And now is the time for Mainers to secure them. Lawmakers hear a lot from business lobbyists on corporate tax policy issues. You have time to analyze and exploit these arcane guidelines. They rarely hear from their actual voters where that money could be better spent.
A few phone calls to stiffen their spines and remind them of the values on which they were running for office could do a lot of good.
Photo: Creative Commons, via Flickr user Julien