Redistributive policy

Senator Pouliot: Tax policy is really in the eye of the beholder

One of the major achievements of Republicans during the second regular session of Maine’s 130th Legislature was the planned return of hard-earned taxpayer dollars to Maine residents, which is expected to begin arriving in June. This “Give it Back” initiative is one our caucus has been working on for the past 18 months, as we strongly believe that Maine’s overall tax structure as it stands is not in line with current economic realities.

In fact, the alarming rates of inflation and labor shortages we’ve been experiencing since last year have had major effects on government revenue streams, particularly our sales and revenue collections. income taxes, because prices and wages have risen. Both have been a source of record windfalls and undeniable uncertainty, the latter all the more so if we slip into a predicted recession.

I fully recognize that it was a bipartisan effort – the amending budget was unanimously approved by the Committee on Credits and Financial Affairs. And for an emergency bill such as a supplementary budget to take effect immediately after it is passed, it must obtain a two-thirds majority in both houses.

That’s not to say there haven’t been bumps along the way, which unfortunately stem from major philosophical differences in how our parties view taxpayers’ money. A fine analysis of this cleavage was the subject of an article in tax time, where the author refers to the findings of Stefanie Stantcheva, economist and professor at Harvard University. His paperpublished in August 2021, examined how Americans think about taxes and broader tax issues related to fairness and the role of government.

While people on both sides share common ground on many issues, Stantcheva found the underlying reasoning regarding taxes; their behavioral and economic effects, and the way they are perceived differ considerably. Much of this gap results from how government and its underlying role are perceived.

For Democrats, taxpayers’ money is often considered government money, regardless of its source, and is meant to be spent on whatever program or latest topic it deems worthy. They further believe that the redistribution of income and wealth are essential elements of social justice and equity, regardless of the personal efforts of those who created it in the first place.

On the other hand, Republicans believe that the origin and purpose of taxpayers’ money is equally important, and that the government is simply the steward of those funds. Therefore, if the government is fully funded, any excess revenue should be returned to those who contributed to it. If not, the growth of government in form and function to an unsustainable point is the major risk.

This, according to the study, is where the real fundamental difference lies – it’s a binary choice where data doesn’t matter if how you think about it is what ultimately drives policy decisions. It’s a bit like the legal profession, where six different lawyers could invariably give you six different opinions on the same law.

Fortunately, we took a different approach this time around. While it was hard for some Democrats to accept the overwhelming fact that a $1.22 billion surplus — mind you, more than a quarter of our typical annual budget — was just too much to keep, they when even tried to divert some of those who won. Republicans held the line and even increased eligible income caps, ensuring that more Mainers who paid taxes would get some of it back. If you need help determining if you qualify and what you need to do to get your $850 check, you can go to our guide on our website.

While we were also able to enact tax reform by increasing the retirement income exclusion, there is no doubt that pursuing reform will always be a challenge as long as our ways of thinking about it differ so widely.

There is still work to be done, but rest assured that we will continue to advocate for you to keep more of the money you earn.

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