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Can Taxes--or Lack of Them--Free Maine?

  • Sep 23, 2013 | Gail Cole

 Moosehorn National Wildlife Refuge, Washington County, Maine.


Maine is a lovely state. It has a long craggy coastline, quaint historic towns, and vast open spaces. From Mount Desert Island Downeast to hip Portland down south, Maine woos visitors and residents alike.

Yet Maine is also a state with real economic issues. Its per-capita economic output ranked 40th in the nation in 2011. According to a report issued last fall by the New England Council, Maine lags behind most states in manufacturing and professional and business services. Like many states, recovery from the recession has been slow.

Free Maine, an initiative proposed by the Maine Heritage Policy, seeks to change that. It would free Maine from economic stagnation and spur economic development statewide--basically turbo-charge Maine. The initiative would make Maine the ''tax haven' of the northeast, where entrepreneurs can thrive, where retirees can enjoy more of what they have saved, where families can keep more of what they have earned."

If you think that sounds nice, you're not alone. The administration led by Governor Paul LePage (R) is reportedly looking into the feasibility of eliminating state taxes "in Maine's most economically distressed counties." Counties would be rated against each other on four counts: the unemployment rate, the poverty rate, the 5-year change in population and the 5-year change in the private sector share of personal income. The county that fares the worst "would have its personal income, corporate income and sales taxes eliminated in an attempt to boost investment in the county and improve its economy."

Currently, Washington County wins the dubious distinction of having the worst economy in Maine. Scott Moody, CEO for the Maine Heritage Policy, called it a county in "terminal economic decline." Proponents of the plan argue that even if it fails, the state won't suffer because the poorest communities don't contribute much tax revenue to the state.

That said, the proposal is sure to have opposition. House Majority Leader Rep. Seth Berry (D-Bowdoinham) has said that "the administration has a long history of proposing new tax loopholes and then not being able to pay for it." He worries that such a policy would move jobs rather than create new jobs. Democratic Senator Anne Haskell called the policy "short on reality."

Still, there may be something to eliminating income and sales taxes. Neighboring New Hampshire--the Live Free or Die State--has neither an income tax nor a general sales tax; it also has the lowest poverty rate in the country.

So long as there is sales tax, it needs to be managed well. An automated sales tax solution makes handling sales tax simple.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.