TAX NEWS - June 2010

Maine Tax: Maine Voters Halt Income Tax Cut in Ballot Question

Maine voters approved a ballot question that prevents the state from lowering its income-tax rate and replacing the lost revenue by expanding the sales levy and eliminating mortgage-interest deductions.

The referendum passed by 61 percent to 39 percent, with 79 percent of precincts reporting, according to the Associated Press. It overturns a law signed by Governor John Baldacci last year that would have lowered Maine's top tax rate to 6.85 percent from 8.5 percent, increased the number of goods and services subject to the 5 percent sales tax, removed exemptions and deductions, and lifted the meals and lodging levy to 8.5 percent from 7 percent.

"The people of Maine saw through what this dramatic change promised and what it would actually do," said Curtis Picard, executive director of the Maine Merchants Association and treasurer of Vote YES to Reject New Taxes, before the vote.

The political action committee raised $27,180 for the campaign and a group called Save the Mortgage Interest Deduction raised $222,589, according to the Maine Commission on Governmental Ethics and Election Practices.


No Higher Taxes

The campaign to defeat the ballot question and permit the tax changes was led by a political action committee called No Higher Taxes for Maine, which raised $337,180, according to the state. The Maine State Chamber of Commerce supported the campaign as did Leon Gorman, chairman of Freeport, Maine-based retailer L.L. Bean Inc., who contributed $25,000 to the committee, state data show.

The No campaign also drew support from Donald Sussman, chairman of Trust Asset Management, who contributed $150,000 to the group; and Daniel Tishman, chairman of New York-based Tishman Construction Corp., and Sheryl Crockett Tishman, who gave a combined $100,000, state records show.

"People are very sensitive to new taxes, and tourism is a very big industry up here," said MaryEllen FitzGerald, president of Critical Insights Inc., a market research and public opinion polling in Portland, Maine, before the vote.


Bond Issues

Voters also approved ballot questions authorizing Maine to borrow $26.5 million for an offshore wind energy demonstration site, $47.8 million for transportation projects and $10.25 million for water infrastructure, according to AP. A fourth measure that would allow the state to borrow $23.75 million for economic development projects was still undecided. With 79 percent of precincts reporting, 51 percent of voters were in favor and 49 percent were opposed, the news agency said.

Paul LePage was declared the winner of the Republican primary for governor with 38 percent of the vote, and Libby Mitchell the Democratic nominee with 35 percent, according to AP. Baldacci, the incumbent Democratic governor, is barred from seeking reelection this year because of state term limits.