Corporate profits

Mills’ corporate profit tax break is bad policy and worse policy


Eighty-two million dollars is a lot of money. For a state in the throes of a deadly pandemic, this could be a lifeline.

People who have lost their jobs or their homes could desperately use this type of support at this time. The same goes for small businesses that barely keep their doors open. The same goes for schools and educators in Maine, teaching our children under unprecedented conditions. The same goes for the cities of Maine, forced to reduce their budgets.

And there are new priorities that have grown in importance over the past year. Eighty-two million dollars could be used to fix our public health infrastructure, increase COVID testing and provide better PPE to defeat the mutating virus. It could connect much of the state to reliable high-speed internet or extend child care for working parents.

Instead, at the insistence of some of Maine’s most brazen corporate lobbyists, Governor Janet Mills is now proposing to take $ 82 million out of a crude budget and give it as tax relief to profitable businesses.

Distressed businesses left behind

This is what Mills’ proposal does. Don’t believe for a second the lies of legislative Republicans that small businesses in Maine need this money “to keep their doors open and people employed.” If a business is truly breaking even right now, it won’t see a dime of this proposition.

Tax relief allows profitable businesses to double their taxes. Businesses that have previously successfully secured a grant from the federal government’s Paycheck Protection Program, which they then spent tax-free on salaries and benefits, will be allowed to reapply the amount of this subsidy as a deduction from their end-of-year profits. , reducing their corporate tax by up to a million dollars.

Companies that barely manage will only get pennies from this proposal. Those who have made no profit and who suffer the most are left completely in the cold.

Bad tax policy looms

Governor Mills, having caved in to pressure from the business lobby, is now putting the same pressure on his fellow Democrats in the state legislature to speed up his legislation. On Tuesday, seven Democrats who form the majority of the tax committee voted to move the proposal forward to the appropriations committee, which will review it in the coming days.

Corporate politics can be confusing, convoluted and mind-numbing. This makes it easy for corporate lobbyists to paint an easy narrative to advance their own interests.

The truth is, small businesses are hurting. Democrats on the Tax Commission who voted for this tax break did so because they care about struggling small businesses in their communities. However, this proposal is not the solution. It only helps profitable businesses and does nothing for struggling small businesses.

This makes it even harder for small businesses to compete when profitable businesses get a helping hand.

Supporters of the tax break have argued that Maine needs to forgo this double benefit and partially comply with a federal tax break because it’s closer to what Congress intended when it passed the P3. But it is absolutely wrong. Other states don’t comply, and Maine never complied with all federal tax breaks, even under former Governor Paul LePage.

And if that’s their argument, what about the intention of the people of Maine, who twice voted in referendums to have the state fund 55% of local education? This requirement was ignored in Mills’ budget. What about the law passed by the Maine legislature in the last session, funding revenue sharing with cities at 5%? Also ignored.

Even if the intention was to amplify the effect of pandemic assistance, how about starting with unemployment assistance, rent relief or reduced student loans, which – unlike the PPP Grants – Are Fully Taxed?

If the intention is to help small businesses, give it to them, not the big profitable businesses.

Knuckle under only intensified Republican attacks

This proposal is not just a horrible policy. It is also terrible politics.

By pushing so hard for partial “compliance,” Mills has validated and entrenched the Republicans’ framing on this issue and the lies they tell about its effects. She handed them a rhetorical club with which to beat the Democrats.

The governor’s plan for corporate income tax relief was first announced publicly by business lobbyists during a Maine State Chamber of Commerce webcast.

If the administration thought that going to the Chamber of Commerce would prevent its opponents from attacking them, it was wrong. The ink wasn’t even dry on Mills ‘press release when House Republicans issued a statement hammering her for not going even further, using Mills’ own arguments to say Democrats were picking them up. winners and losers by capping deductions at $ 1 million and ignoring “thousands of workers and the families who depend on them.”

The next day, former Gov. LePage, who plans to run against Mills next year, used his Maine People Before Politics political vehicle to lambast Mills for “TAKING MONEY FROM COMPANIES HURTED BY THE PANDEMIC” while pushing her. also striking, paradoxically, for making an irresponsible raid on the rainy days fund to pay for the tax breaks it was offering.

Even if Democrats are going to cave in to Republicans on this issue and give an amoral tax cut for the state’s most profitable businesses, they should at least demand something in return, like funding actually meant to support families. , workers or small businesses in Maine. .

If they speed up Mills’ proposal, they remove it from the normal budget process and from the negotiating table, making it all the more difficult to integrate their own priorities into the final biennial budget.

It is not finished

Fortunately, there is still time to turn around. Democrats in the legislature should refuse to be intimidated by these bogus attacks. Now is the time for them to stand up and publicly stand up for the priorities they and the people of Maine share: healthcare, education, defeating COVID; not another tax break for profitable companies.

And now is the time for Mainers to support them. Lawmakers hear a lot from business lobbyists on corporate tax policy issues. They are the ones who have the time to analyze and exploit these obscure policies. They hardly ever hear from their real constituents where this money could be better spent.

A few phone calls right now to remind them of their community’s real priorities could do a lot of good.

This column has been edited from the original version. Photo: Creative Commons, via Flickr user Julien