Independent Eliot Cutler is proposing a tax overhaul that would slash property taxes for many Mainers while raising the sales tax, either permanently or seasonally, to make up the difference. Cutler, who's in a three-way race for governor with Republican incumbent Paul LePage and Democrat Mike Michaud, chose tax day to unveil the plan, which he says would lower property taxes for most Maine homeowners by 20 to 40 percent by boosting tax relief through the homestead exemption.
Speaking at a press conference in Portland Tuesday morning, Cutler said it's time to "reboot'' Maine's tax system, which he describes as outmoded, unfair and inefficient.
"More than any other tax, property taxes increasingly place a disproportionate burden on particularly vulnerable groups of Mainers," Cutler said. "Today 11 percent of Maine households pay more than 10 percent of their income in property taxes." While some Mainers, he adds, pay as much as 20 percent of their income in property taxes.
Cutler's proposal aims to put money back into the coffers of local communities by providing $100 million for state assistance to communities and $75 million for education. A further $10 million would be set aside for branding and marketing efforts to boost tourism.
To pay for this, Cutler's plan proposes either a permanent sales tax increase from 5 percent to 6 percent, or a hike in the seasonal sales tax, which for most items would increase to 7 percent between May and October. He also proposes making permanent the currently temporary 8 percent tax on meals and lodging.
Cutler says it's all part of plan to shift some of the tax burden onto non-residents. "I want to export some of the burden to the visitors who come to Maine to enjoy our state," he said. "We're 1,300,000 people. We're responsible for a huge piece of real estate. People come every year, 15 million of them."
"It's a very complex plan. When you look at the whole tax structure, we ought to be simplifying the tax structure, not making it more complex," says Cutler's Democratic opponent, Congressman Mike Michaud, who currently represents Maine's 2nd Congressional District.
Michaud says the best way to reduce property taxes is for the state to meet its existing obligations to towns and cities by funding municipal revenue sharing and the state's share of K-12 education. Furthermore, he says Cutler's plan picks winners and losers - the "mil rate" he refers to here is the amount of tax that's charged per $1,000 dollars of a property's value.
"When you look at that tiered system proposed under Mr. Cutler's plan, some municipalities would have to increase the mil rate to comply with the plan," Michaud says.
"Let's make one thing clear," says Republican Gov. Paul LePage's strategic adviser Brent Littlefield, "there is only one candidate running for governor who has actually cut property taxes multiple times as a mayor, instituted the largest tax cut in Maine state history, which eliminated income taxes for the working poor, and helped small business, and who has announced his goal of eliminating the state income tax all together, and that is Gov. Paul LePage."
Littlefield describes Cutler's tax proposal as "robbing Peter to pay Paul," because it raises taxes in one place while cutting them elsewhere. He also points out that any decision to cut property taxes would not ultimately be Cutler's to make.
"It's kind of ridiculous that Eliot Cutler is announcing he's going to lower property taxes when he has absolutely no control over that. No governor does," Littlefield says. "Towns and cities make their own choices and their own decisions, and we've seen repeatedly in Maine that when towns and cities get more money, they're not cutting taxes, they're usually just increasing spending."
Meanwhile, Crystal Canney, communications director for Cutler campaign, issued a statement in response, effectively saying Cutler's plan gives Maine towns and cities an incentive to collaborate by providing them with the state funding they need.