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Is This For Real? Is Maine Ready to Scale Back Targeted Sector Economics?

I have been busy lately with our ceramics business and with some new ideas for expanding the mission of this blog, however a very important change in our legislature's tax policies is now under consideration making this a moment when it is exceptionally important to  keep the conversation going !

I have not located the actual proposals yet, mysteriously, all the links in this Portland PressHerald article are non-functioning but here is the story from the Herald by Steve Mistler, of all people!

Maine tax panel will release suggestions for savings Monday

 The Legislature has attempted similar reviews in the past with little success. However, this time some believed that the self-inflicted budget gap would provide an incentive for lawmakers to push through recommendations that have been traditionally politically unpopular. Additionally, the budget provision is written in a way that would take the $40 million out of the state fund that provides municipal aid if the Legislature can’t repeal or restructure the tax exemptions to find the savings. (link that does not work is in the article)

In other words this is a fundamental issue that pits local municipal government against Maine State Inc. Constitutionally only the municipalities are authorized to be the agents of economic development. Until the Home Rule Amendment, the municipalities could not do so because public funds are supposed to be used only to public purposes. The Home Rule Amendment authorizes the municipalities to act as agents of economic development.

However, the brief furor over the amusement tax likely belies the real debate. Signals from Democratic lawmakers and aligned advocacy organizations have focused less on sales tax repeals than scaling back or reforming tax breaks or economic development programs for big businesses. Some of those programs were the focus of a 2006 report by the Legislature’s watchdog agency, the Office of Program Evaluation and Government Accountability.

From what I have seen on the web, these proposals are being represented as an increase in retail sales taxes, which is what we have come to expect from our legislature as the revenue cure- all for a state with huge expenses going to "targeted sector economics, which are all those business programs spoken of in this article, designed to benefit special interests selectively chosen by the state. I cannot believe what I am reading ! Even after the 2006 Opega Report, which identified the size of the hole in the state budget as equal to the cost of targeted sector economics, the legislature continued to aggressively expand policies identified as having no proven effect in creating jobs. Since the 2006 OPEGA Report, the fundamental transformation of Pine TreeZone moved “silently through the legislature” to be expanded to the entire state. This year the legislature passed the “Expanded and Improved Capital Seed Tax Credit” authorizing the unelected boards governing the state’s economic development policies to increase by eight fold the rate by which public funds can be transferred to private corporations and capitalists!

What has gotten into our legislature? Why for the first time are we hearing that reducing the expenditure of targeted sector economics is under consideration. The article suggest political and electoral motivations – in which case it better be so that are politicians are speaking truthfully and the Republicans, if they are smart, will stop trying to portray this as another Democratic assault on the retail industry vis a sales tax hike. Why are so few picking up that the fundamental focus is a reconsideration of economic development policies which multiple studies have reported do not work!

And why are none of the links to further information in the PPH article working? What is going on here? Has the world turned up side down? I’m liking it this way. I don’t care which political party is the motivator of reversing the “economic development “ direction in which we have been going. I just care that it is reversed. If we didn’t have to spend  so much money on economic development for special interests, we might not need so much revenue to operate our government and then perhaps we can follow New Hampshire’s lead and get rid of the sales tax. New Hampshire is always way ahead of us on every economy list and study! That should send us a clue!

Please contact your Representative in favor of reducing tax incentive economic policies !


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