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Below is my most recent TREASURER'S BLOG. Please share it with your family, friends, and associates. My speaking schedule is posted on the Treasury website, where there is also a place to invite me to speak to your group. Thank you.
Maine is the proud home of many hard working, successful people: dedicated teachers and coaches who inspire our kids; caring nurses and doctors who comfort our sick and elderly; resourceful fisherman and farmers who feed us; independent loggers who help shelter us; creative artists who enrich our everyday lives; and loving parents who raise our next generation of Mainers.
Unfortunately, what Maine does not have are enough high wage earning residents. That’s a big economic and job problem for our state.
The 2008 U.S. Census shows that only 10,951 Maine households out of our population of 1.3 million earned more than $200,000. In neighboring New Hampshire with essentially the same population, the number is 23,710 households. That’s twice the amount at this earnings level right across the border.
Maine Revenue Service reports that those 10,951 Maine households account for less than 2% of all state income tax filers. Yet, those households pay more than 24% of all Maine income tax.
A fact of life is that hard work doesn’t always result in financial reward. Much depends on the chosen line of work. What we do know, however, is that higher wage residents pay more tax dollars than lower wage earners. The growing tax revenues help educate our kids, pave our roads, and care for the needy among us. The more financial success generated in Maine, the better.
When I was growing up in Waterville, nobody had much money. If a neighbor drove up in a new car, my parents pointed out how hard the family had worked to enjoy the purchase. Never was there a message of envy. Instead, it was “How can we learn from their hard work and success?”
Today, there is scarce individual wealth still claiming Maine as its residence. Are we better off because Augusta has created rules that drive high wage earners out-of-state? Are we more prosperous because retirees leave Maine to avoid the high taxes and energy/health insurance costs? Are there more jobs because fewer high earners are here to dine out, go to the movies, buy new tires, hire an accountant, or start a business? We all know the answers are “no.”
90% of all Maine businesses employ less than 20 workers. The owners are not corporate fat cats. They’re our neighbors who invest their savings to start a beauty shop, car wash, or landscaping service. As sole proprietorships or limited liability companies (LLCs), these small businesses are taxed at the same high Maine income tax rates as are individuals.
It’s fiscal lunacy to force those who are willing to risk their own capital and job security to start a business here, to leave our state. Nevertheless, over the past 35 years, our elected officials have done just that. That’s why there are only 10,951 Maine households remaining that earn over $200,000 annually. That’s why our kids keep leaving for better opportunities elsewhere.
The new leaders in state government will no longer bite the hands that feed us. We’re building incentives to keep job creators here, and to bring others back home to Maine. Like the $150 million tax reduction package just passed by the Legislature. It includes state income tax cuts for 460,000 residents, including the financially successful who create most of the jobs. 70,000 low income fellow Mainers will pay no state income tax at all. The package includes a tax cut for small businesses, and for our neighbors who own them, which invest in new equipment so that more jobs are created. It doubles the death tax exclusion to $2 million. This will allow more family farms and other small businesses to keep operating and be passed on to the next generation, instead of being forced to sell them to pay Maine Revenue Service.
Our elected officials create the rules by which the Maine economy operates. During the past 35 years, rising taxes and fees have been part of the rules. So have been punitive business regulations. High energy and health insurance costs have added to the problems. It’s no wonder why, in 2010, Forbes Magazine ranked Maine’s business climate 50th lowest in the nation. It should be no surprise that the median household income just over the state line in New Hampshire is $19,000 per year higher than here in Maine.
Our new leadership team in Augusta finds this unacceptable and is changing it. During the past six months we’ve started changing the attitude toward those who create private sector jobs. State government’s goal is to help our businesses grow and hire more Mainers. To make it easier to operate a business here, not get in the way.We’re putting in place the pieces to build a business-friendly climate in Maine. A government that spends less, taxes less, regulates less, and borrows less will help get us there. It all adds up to more jobs and fatter paychecks for our fellow Mainers. Let’s welcome and encourage financial success in Maine. Let’s thank the job creators for helping to keep our kids here.
Maine State Treasurer