By Rep. Cynthia Dill

 One of my most vivid memories from this past legislative session was the day that more than 1,000 Mainers filled the halls of the State House to oppose drastic budget cuts to state programs and services that ensured their wellbeing and, in some cases, survival. The main walkways were impassable for hours, and the hearing rooms overflowed with people from all walks of life and various affiliations who testified before the Legislature about how budget cuts would affect them.

  We heard testimony from low-income parents stretched thin, who could scarcely make it through a sentence without choking up at the likelihood of losing vital assistance for their families. We listened to the mentally and physically disabled and their caretakers, who rely on ever-dwindling state assistance for care and the basic necessities of food and shelter. And we heard from think-tank lobbyists, who foretold the second coming of TABOR if we legislators didn’t do something about Maine’s “spending problem.”

  For weeks we wrestled with decisions that were among the toughest I, for one, have ever made, weighing the long-term costs of deep cuts to essential services against the consequences of political stalemate and government shutdown if the budget wasn’t passed. Central to this challenge was the issue of how state spending impacts Maine’s tax burden. For years, conservative lobbyists and policy makers have inhibited productive economic development discussions with the claim that Maine’s tax burden is among the highest in the nation and the cause of all Maine’s woes.

 But it turns out that claim is wrong. The Tax Foundation, an organization that has led the charge on labeling Maine’s tax burden as one of the worst, recently acknowledged a significant flaw in their calculation of states’ tax burdens. The error comes from including in Maine’s tax burden property taxes paid by second-homeowners from out of state even though they don’t earn income here and are not Maine residents. Considering Maine has more second homes owned by out-of-staters than most states, this error seriously skews the actual tax burden borne by Mainers. Economists in Maine and other states where tourism powers the economy have pointed to this error for years.

 The Tax Foundation has conceded its mistake and recalculated Maine’s ranking for this year and previous years to account for it. Under the adjusted calculation, Maine ranks 15^th in tax burden for 2008, not first; and over the last three years Maine’s tax burden and national ranking have improved despite sharp increases in the cost of living. This improvement demonstrates that the efforts of the state to reduce the overall tax burden are actually working. Imagine how much more productive we could be if we weren’t always being warned the sky is falling.

 While 15^th is still too high in my opinion, Maine’s tax burden is only 0.3 percent higher than the national average, even though our average salary ranks among the lowest. So the issue to address is not Maine’s tax problem so much as it is Maine’s income problem.

 We can address this problem by implementing policies that will result in an increased average salary. 

First and foremost, we need to allow Mainers to pocket more of their paychecks by lowering the income and capital gains tax rates and broadening the sales tax base to export more of the burden. This type of tax reform continues to be one of my top priorities, and I am optimistic that the majority of my colleagues in the Maine House and Senate will soon agree.

 Additionally, if the average paycheck contained just a few thousand dollars more per year, Maine’s tax burden would be at or below the national average. We have made headway with successful legislation to increase the minimum wage, provide ongoing education opportunities and incentives to better train our workforce, and invest bond money in cutting edge technology and other research and development ventures. We should consider these successes the tip of the iceberg, because we still have much to do and more tough decisions to make.

 The Tax Foundation’s admission of mistake should certainly not make us complacent, but it is critical that across the board we recognize how this error has inundated discussions about Maine’s future with cynicism and pessimism, preventing constructive dialogue about how to fulfill our obligations to Maine people and propel Maine’s economy into the 21^st Century.

 The real evidence proves that we have reason to feel optimistic that our hard work is paying off. We must resist the call from some to wallow in negativity and anger and instead focus our energy on creating innovative policies that will improve the lives of Maine people. 

Rep. Dill is a Democrat representing part of Cape Elizabeth in the Maine House of Representatives and a member of the Cape Elizabeth Town Council.