Chase reflects on tax reform failure - Learning experience in legislative process.
Reprinted with permission by the York County Coast Star
July 05, 2007 6:00 AM. By Jim Kanak. jkanak@seacoastonline.com
Chase reflects on tax reform failure - Learning experience in legislative process.
WELLS — When State Rep. Kathy Chase (R-Wells) got elected to the Dist. 147 seat in November 2006, she said her first choice of committee assignments was the Joint Committee on Taxation. Despite being a first-term representative, Chase got her wish. It was the work of that committee, most notably the tax reform package that died in the final hours of the legislative session, that framed her experience over the nearly seven months of the term.
"It was highly interesting and dynamic," she said. "That committee is second only to Appropriations in terms of authority. We started outlining the tax reform bill in the first couple of weeks. We began by setting out ground rules and principles."
During the course of the session, Chase said the committee received a lot of bills from legislators, including her own, that dealt with tax reform. All of these had to be considered. "From the beginning, everything was on the table," Chase said. "We agreed we'd slowly work things out."
One of the criticisms leveled at this legislature was that it did not adequately address tax relief. Chase said her committee only had jurisdiction over tax reform, not spending cuts. "We looked at redistributing the load," she said. "The Taxation Committee has no jurisdiction over reducing spending. We tried to get that message out but couldn't."
The committee early on agreed that property tax and income tax were the two areas that citizens demanded be reformed. "To shift the load from income and property tax we had to shift it to the ones we were light on," Chase said. "Those were the sales tax and exportability, that is, shifting the load to [non-residents].
"We kept the overall sales tax at 5 percent, but expanded it [to non-taxed services]. None of us were comfortable with that but it was the only way to make things more balanced. One of the benefits of broadening it was it was fairer to have outsiders share in the burden. Then we took all the anticipated revenue to reduce the income and property tax."
Among the most controversial proposals were increases to the meals and lodging tax from 7 to 8 percent. "That's the same as in New Hampshire," said Chase. "Tourists who come here pay more for both in their own states."
Chase said the argument that the committee eliminated mortgage deductions was not entirely correct. "We got rid of deductions but included tax credits," she said. "That reduces the amount of taxes people pay. In the end, they'd end up paying less tax. The revenue from broadening and shifting the burden would directly benefit Maine residents. Tax credits could only apply to Mainers."
Other features of the committee's package, Chase said, included a doubling of the Homestead Exemption while allowing towns to not participate if they chose, expansion of the circuit breaker program for low income people, creation of a tax payment deferment program for elders, and allowing towns to keep 10 percent of "natural sales tax growth" beginning in 2009.
"There would have been a reduction of $140 million to Maine residents," Chase said. "90 percent [of residents] would have benefited."
To forge a full agreement of the package, Republican and Democratic committee members developed a compromise. "For the Republicans, tax reform was coupled with a constitutional [amendment] piece," said Chase. "It had three parts. First, any increase or decrease in sales, excise, or income taxes need a two-thirds majority vote in the legislature.
"Second, there was an opt out [for towns] for homestead exemptions. And third, we would allow a local options sales tax. Voters would have voted on each [amendment] individually."
Chase said the agreement was that Republicans would support the reform package if Democrats would support the constitutional changes, and vice versa.
So, why did the package ultimately fail? Basically, Chase said, things started to unravel when the full individual chambers got involved. There was disagreement on whether all three of the constitutional amendments would be approved. Ultimately, Chase said, the two bodies couldn't agree.
Ultimately, the Senate voted the tax reform piece down and the House killed the constitutional amendment proposal, ending things.
Reprinted with permission by the York County Coast Star
July 05, 2007 6:00 AM. By Jim Kanak. jkanak@seacoastonline.com
July 05, 2007 6:00 AM. By Jim Kanak. jkanak@seacoastonline.com
Chase reflects on tax reform failure - Learning experience in legislative process.
WELLS — When State Rep. Kathy Chase (R-Wells) got elected to the Dist. 147 seat in November 2006, she said her first choice of committee assignments was the Joint Committee on Taxation. Despite being a first-term representative, Chase got her wish. It was the work of that committee, most notably the tax reform package that died in the final hours of the legislative session, that framed her experience over the nearly seven months of the term.
"It was highly interesting and dynamic," she said. "That committee is second only to Appropriations in terms of authority. We started outlining the tax reform bill in the first couple of weeks. We began by setting out ground rules and principles."
During the course of the session, Chase said the committee received a lot of bills from legislators, including her own, that dealt with tax reform. All of these had to be considered. "From the beginning, everything was on the table," Chase said. "We agreed we'd slowly work things out."
One of the criticisms leveled at this legislature was that it did not adequately address tax relief. Chase said her committee only had jurisdiction over tax reform, not spending cuts. "We looked at redistributing the load," she said. "The Taxation Committee has no jurisdiction over reducing spending. We tried to get that message out but couldn't."
The committee early on agreed that property tax and income tax were the two areas that citizens demanded be reformed. "To shift the load from income and property tax we had to shift it to the ones we were light on," Chase said. "Those were the sales tax and exportability, that is, shifting the load to [non-residents].
"We kept the overall sales tax at 5 percent, but expanded it [to non-taxed services]. None of us were comfortable with that but it was the only way to make things more balanced. One of the benefits of broadening it was it was fairer to have outsiders share in the burden. Then we took all the anticipated revenue to reduce the income and property tax."
Among the most controversial proposals were increases to the meals and lodging tax from 7 to 8 percent. "That's the same as in New Hampshire," said Chase. "Tourists who come here pay more for both in their own states."
Chase said the argument that the committee eliminated mortgage deductions was not entirely correct. "We got rid of deductions but included tax credits," she said. "That reduces the amount of taxes people pay. In the end, they'd end up paying less tax. The revenue from broadening and shifting the burden would directly benefit Maine residents. Tax credits could only apply to Mainers."
Other features of the committee's package, Chase said, included a doubling of the Homestead Exemption while allowing towns to not participate if they chose, expansion of the circuit breaker program for low income people, creation of a tax payment deferment program for elders, and allowing towns to keep 10 percent of "natural sales tax growth" beginning in 2009.
"There would have been a reduction of $140 million to Maine residents," Chase said. "90 percent [of residents] would have benefited."
To forge a full agreement of the package, Republican and Democratic committee members developed a compromise. "For the Republicans, tax reform was coupled with a constitutional [amendment] piece," said Chase. "It had three parts. First, any increase or decrease in sales, excise, or income taxes need a two-thirds majority vote in the legislature.
"Second, there was an opt out [for towns] for homestead exemptions. And third, we would allow a local options sales tax. Voters would have voted on each [amendment] individually."
Chase said the agreement was that Republicans would support the reform package if Democrats would support the constitutional changes, and vice versa.
So, why did the package ultimately fail? Basically, Chase said, things started to unravel when the full individual chambers got involved. There was disagreement on whether all three of the constitutional amendments would be approved. Ultimately, Chase said, the two bodies couldn't agree.
Ultimately, the Senate voted the tax reform piece down and the House killed the constitutional amendment proposal, ending things.
Reprinted with permission by the York County Coast Star
July 05, 2007 6:00 AM. By Jim Kanak. jkanak@seacoastonline.com
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