Legislature's Budget Office Says Tax To Fund Home-Based Care Would Affect Married Couples

Oct 18, 2018

For months, the debate over Question 1, which would set up a system to fund a network of home health care workers through a new income tax surcharge, has focused on who would actually have to pay it. At issue is whether the new 3.8 percent tax would apply only to individuals who earn more than $128,400 a year or also to married couples who exceed that amount and file joint returns.

A new memo from the Legislature's nonpartisan budget office would appear to settle the debate, but supporters of Question 1 say the entire argument is a smokescreen.

The memo by the Office of Program and Fiscal Review, or OFPR, says the proposed tax would in fact affect married couples who file joint returns.

An analyst for the agency went further, saying that the campaign behind the initiative focused on the word "individuals" in the ballot question's financial analysis, even though the revenue expected to be generated from the tax exceeds $310 million. In other words, the OFPR analyst says, there is no way to generate that kind of revenue if the Question 1 tax surcharge applies only to individuals who make more than $128,400 a year.

Newell Augur is a spokesperson for Stop the Scam, a coalition of business groups, including the Maine State Chamber of Commerce, that opposes Question 1.

He says the memo confirms what opponents have said all along.

"At least we have settled this matter for Maine voters so that on Nov. 6 when they go to the polls, they will know that any family making more than $128,000 a year is going to get hit with this 3.8 percent tax," said Augur.

But Mike Tipping with the Mainers for Home Care campaign says the memo changes nothing. He says the intent of Question 1 has always been that the tax surcharge applies only to individuals.

"We believe the wealthiest should pay just a little bit more, that 2.6 percent, and make sure that every senior, every veteran, every Mainer with a disability can get the care they need," he said.

\ And, Tipping says, if Question 1 passes in November, he doubts that any group, including opponents of Question 1, will be lobbying the Legislature to make sure that the law does also apply to married couples filing jointly.

"There is absolutely zero chance that the Chamber of Commerce, other opponents of any kind of tax increase on the wealthy, would argue for a broader tax," he said.

But Newell Augur, with Stop the Scam, notes that the OFPR memo also questions whether Maine Revenue Services would even be able to assure that the surcharge is applied only to individuals who happen to file jointly. That's because joint-filers effectively file as a single taxpayer.

"If, God forbid, Question 1 passed and it was it going to be implemented, Maine Revenue Services would have to go and change every Maine tax filing, especially for married couples, if they were going to try and effectuate something other than what is actually in the language," Augur said.

But Tipping insists that his group will maintain its position that Question 1 affects only individuals, even if it becomes law. And he suspects that opponents of Question 1 will take a similar position if voters approve it November.

Originally published Oct. 17, 2018 at 5:21 p.m. ET.