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A Revenue-Raising Plan for Maine

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Publication Date: January 1999

Publisher(s): Economic Policy Institute

Author(s): Daphne A. Kenyon

Topic: Banking and finance (Taxation and tax policy)
Economics (Economic policy, planning, and development)

Type: Brief

Coverage: Maine


If the state of Maine were to consider a significant increase in public expenditures or needed more revenue to close a fiscal deficit, what changes in the state's tax structure would best accomplish such objectives? Given that Maine's general fund revenue for the fiscal year 1998-99 biennium is projected to be $3.78 billion, a 10% revenue increase would generate another $378 million for the state (State of Maine, Bureau of the Budget 1997).

The issue considered in this report is how such an increase can best be accomplished. In exploring options for raising revenue in Maine, this report's analysis is based on certain basic principles. The first is that political expediency is not the most important criterion for choosing among revenue-raising strategies. While political expediency should not be ignored, public policy should first strive to achieve more important goals in designing a tax system, such as ensuring its equity, efficiency, and stability.

Furthermore, any plans for raising Maine's revenue must be considered within a broader context, one that accounts for the state's current tax structure and fiscal situation and considers the tax policies of other states, particularly Maine's neighbors and competitors.

This report first examines crucial background information on Maine, including a brief description of its current fiscal structure and a comparison of its tax structure to those of neighboring and other relevant states. Current tax issues are also summarized before addressing this report's central concern - a set of policy proposals that outline revenue-raising opportunities for Maine.