Expanded use of D.C. ballpark tax
California tax votes June 8

Maine tax reform vote June 8

Maine voters will decide tomorrow (Tuesday, June 8) whether to support a change to their tax structure approved last year.

That 2009 measure would create a single, lower income tax rate for most Mainers. The current tax brackets of 2 percent, 4.5 percent, 7 percent and 8.5 percent tax brackets would be replaced with the  flat tax rate of 6.5 percent for those with income up to $250,000.  Residents with income more than  $250,000 would be taxed at 6.85 percent.

To make up lost income tax revenue, the law also would broaden the state's sale tax base so that its  5 percent rate would apply to many services and goods that  previously were tax-exempt.

                           Photo courtesy channing09915

Last year's proposed changes to Maine's tax system were the first since lawmakers there OK'ed a state income tax 41 years ago.

The question now is will voters keep the changes or nix them?

Confusing ballot phrasing: Heavy hitters have come out on both sides, but what might be as decisive as anything is the ballot initiative's wording that many say is confusing.

A "no" vote on Question 1 tomorrow supports the tax changes while a "yes" vote to repeal the law is an opposing vote. 

So no means yes and yes means no and guess what's going to happen tomorrow. Hey, I lived in Florida -- actually in the butterfly ballot county (and still have my sample ballot) -- during that confused electorate debacle.

Pros and cons: Opponents of the tax law change say added sales taxes would primarily hurt elderly and low-income resident, as well potentially stifle tourism since the taxes would be shifted to out-of-state visitors.

Supporters of the new tax system argue that it would help stabilize tax revenues and enable the state to better cope with budget shortfalls.

As I've said before, I don't like ballot initiatives. This Maine example underscores why (and I elaborate on this direct-legislation trend in my Bankrate Taxes Blog). They include:

  • The question before the voters often is confusing. 
  • The debate is being played out by parties with vested interests on either side. 
  • Turnout, which could be affected by things as simple as weather, is often the deciding factor. 

The list of concerns could go on and on.

Here's hoping that Maine's voters give thorough and thoughtful consideration to the tax system question.

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