AUGUSTA, Maine — Maine lawmakers on Thursday began trying to figure out how to ensure Mainers aren’t hit with a higher state tax bill due to the Republican tax overhaul that President Donald Trump recently signed into law.
Gov. Paul LePage’s administration said the governor plans to submit legislation this month aimed at preventing a state tax hike.
“He would not support tax conformity changes that increase the income tax burden on Maine citizens,” Maine Department of Administrative and Financial Services Commissioner Alec Porteous told lawmakers at a joint legislative committee hearing.
Maine joins states around the country that are considering how and if they will change their tax laws in response to federal tax reform. The new federal tax law cuts tax rates and nearly doubles the standard income deduction. It also caps or eliminates some popular itemized deductions and would set personal exemptions to zero.
The biggest beneficiaries from the tax law are wealthy Americans and corporations.
The LePage administration’s new report finds Maine residents and businesses overall could see $1 billion in federal income tax cuts under the overhaul.
But the report also finds that repealing Maine’s personal exemption could contribute to a state tax increase of $250 million annually. Lower- and middle-income Mainers would be hit particularly hard by state tax increases, according to the Maine Revenue Services report.
With lawmakers still at work, it’s unclear if the same Mainers who would see a federal tax cut would see their state taxes increase.
LePage hasn’t released details of his proposal yet, but Porteous said it’s possible Maine could keep the personal exemption in some form.
Lawmakers should work to make sure Mainers don’t see a state tax hike, said Rep. Denise Tepler, who sits on the Legislature’s committees on taxation and appropriations and financial affairs.
“I want to make sure the burden is distributed equitably if there is going to be any increased burden,” Tepler added.