According to the Morning Sentinel, economists believe the wealthy can and will avoid paying much of the 3% tax on annual incomes over $200,000 despite efforts to change the tax code with Initiative 2.
There isn’t anything new about that. Most of the wealthy have always avoiding paying their fair share of taxes. That’s the American way. Donald Trump pays no income tax.
It certainly would make us feel better to force the wealthy to pay their fair share, but that doesn’t fix the problem of funding education. That doesn’t fix the problem of the how and how much should be spent on public K-12 education. For example, how much do sports cost the schools?
Between 2008-09 and the projections for 2016-17, the state’s share of education funding has decreased from about 53 percent to 47 percent, even though voters approved a measure a decade ago that called for 55 percent state funding every year.
An important question is why the Maine public school system needs more money for K-12 education than the rest of the nation. Compared to the national average, state revenue funding schools is 46%. Maine gets 47%.
“One common thread for schools is that the education mill rate — the property tax rate required to raise the statewide local share of education costs — is expected to jump next year to 8.44 from its current rate of 8.23, meaning local towns and districts must foot more of the bill.”
If there was a link to reduce the property tax rate by the same 3% tax on incomes over $200,000, the impact of school funding by property taxes could be softened.
But that won’t happen.
School spending will go up by however much the 3% would deliver and school funding by property taxes will still go up from a state mill rate of 8.23 to 8.44 on top of Waterville’s increase due to revaluation.
The Governor and Legislature have colluded to lower the income rate on the wealthy without a Commensurate increase in revenue. They also reduced revenue sharing from 5% to 2% further shifting the increased cost of government at the local level onto home owners.
Maybe this isn’t the right time to tinker with the tax code incrementally with Initiative 2. That could take the pressure off revising the entire state tax code especially the property tax part for schools.