Maine lawmaker proposes ‘Buffett Rule,’ reversing big tax breaks for top 1%

State Rep. Seth Berry (D-Bowdoinham) says that Maine needs its own “Buffett Rule” — a minimum tax rate first floated by the Obama administration and named after the billionaire investor Warren Buffett, who admitted in a 2011 editorial that he paid a smaller effective tax rate than his staff.

“[Maine’s] tax code, on the whole, is regressive. The top one percent, in particular, pays a significantly lower share than the average Mainer,” Berry told the legislature’s Taxation Committee on Monday. “When all state and local taxes are combined, it is factual to say that incomes are more unequal in Maine after state and local taxes are collected than before. That’s a problem.”

Under Maine’s current tax code, the top one percent of households pay into state and local taxes, on average, at an effective tax rate of 8.6 percent of their yearly income. That is lower than the bottom 20 percent, which pays 8.7 percent, and well below the middle 20 percent, which pays 9.6 percent.

Berry has introduced legislation, LD 1647, which would create an effective tax rate floor below which wealthy Mainers could not fall. To do so, it would apply a “tax equalization assessment” on individual earners making over $250,000 a year, and married couples making over $400,000, if they pay less than the average effective tax rate of the bottom 99 percent of Mainers.

Under the proposed legislation, the additional revenue would be redirected into further funding the Homestead Exemption, the Property Tax Fairness Credit, and the Earned Income Tax Credit — three programs designed to shape a more progressive tax code by lowering the effective tax rates for low- and middle-income Mainers, who pay, on average, a larger percentage of their income on regressive sales and property taxes than the wealthy do.

“Even if we don’t believe in a progressive tax code, even if we just believe it should be flat with everyone paying the same percentage of their income, we’re not even accomplishing that,” Berry said. “We are, in fact, doing the opposite.”

‘Taking it out of working families’

Berry, who is serving his sixth non-consecutive term in the Maine House of Representatives, said that Maine’s tax code became more regressive during the LePage administration when income tax cuts favoring the wealthy, heralded by proponents as the biggest cuts in Maine history, were passed in the 2011 and 2015 state budgets, alongside cutting estate taxes and creating new tax havens for large corporations. In order to recoup some of that lost revenue, state lawmakers and former Governor Paul LePage created a tax mix which drew more from regressive sales and property taxes, shifting the tax burden away from the wealthy.

“This bill would dismantle those efforts,” said Linda Caprara of the Maine State Chamber of Commerce about Berry’s proposal.

LePage’s tax cuts were not paid for, Berry explained, instead, “It was essentially kicking the can down the road, putting it on the credit card. We’ve been paying for it ever since, by not funding our schools, by not getting to the 55 percent that we hoped for, by trimming [municipal] revenue sharing, and essentially taking it out of working families and the middle class.”

In the 127th Legislature, Berry introduced similar legislation in an attempt to create a fairer, more progressive tax code. The bill ultimately failed to pass, and state government inaction on tax fairness, he believes, resulted in the 2016 ballot initiative to place a three percent surcharge on the wealthiest Mainers to help fund 55 percent of public school costs. The referendum passed with the support of 50.6 percent of the voters before being repealed in the 128th Legislature. However, a survey last year found that support for the tax policy behind the ballot initiative has grown, with 54 percent of Mainers saying they support reinstating the surcharge.

In February, Governor Janet Mills introduced her first budget proposal, leaving intact LePage-era tax cuts which will cost the state $864 million in the next budget cycle.

“That surtax on the wealthy was essentially an attempt to take a run at this same issue, to make the tax code fairer,” Berry said of the thwarted citizens’ initiative. “We’re back where we started, and we still haven’t solved this problem of tax fairness.”

(Photo: Bill Gates and Warren Buffett | Spencer Platt, Getty Images)