Tax Flight — This Bird Ain’t Got Wings

According to a story on MPBN, Maine legislators heard presentations from the LePage administration today on LePage’s plan to reduce and ultimately eliminate the state’s estate tax.

Elimination of the estate tax will cost Maine $35 million a year in revenue and benefit fewer than 1 percent of all taxpayers.

In what isn’t exactly a new theme, LePage claims the estate tax is driving wealthy Mainers to migrate to other states.

Where is the data to support this claim, we’d like to ask?

Studies show that there are a number of reasons people relocate from one state to another and that few of them have to do with taxes.  A report from the Center on Budget and Policy Priorities states, “When people do relocate, a large body of scholarly evidence shows that they do so primarily for new jobs, cheaper housing, or a better climate.” 

Another report, “The Impact of Taxes on Migration in New England,” concludes, “The limited available research on the impact on taxes on cross-state migration suggests that taxes do not play a very important role.”

Even if taxes do sometimes affect out-migration decisions of some individuals in states like New Jersey, we’re guessing that is less common here.  It’s not like you can find
Maine’s unique mix of spectacular coastline, natural grandeur, and local culture anywhere else.

And, yes, the quality of local services and amenities is an important factor in decisions to relocate.  It doesn’t look like Maine communities will have much to offer in terms of services if LePage gets his way on estate and income taxes.

–Read more about this issue in today’s Bangor Daily News.

If it favors the wealthy, LePage Supports it.

Shift more of Maine’s tax burden to the poor and middle class? This will be the result if LePage gets his way and eliminates the state income tax.  As quoted in the BDN, a  2011 Maine Revenue services  study found eliminating state income tax would have the following effect:  “The bottom 80 percent of Mainers (incomes less than $86,789) would have an aggregate $223 million tax increase, while the top 1 percent would have a $183 million tax cut. ”

According to an Albert DiMillo opinion piece in the BDN, this added burden to the middle class would be on top of an existing situation in which Maine’s middle class already pay a higher proportion of their income to state taxes than do the wealthy.  Read the full article here.