The $1.9 trillion spending bill recently enacted by President Joe Biden is set to shower state governments with an additional $350 billion in federal cash. Despite being awash in federal money, lawmakers in some states are still pushing forward with unnecessary and harmful legislation to raise taxes. In fact, Americans living at the most western and eastern reaches of the U.S. face state income tax hikes this year.  

Lawmakers in Hawaii are currently advancing both personal and corporate income tax hikes. Democrat lawmakers in Maine, meanwhile, have it made it abundantly clear that they are not afraid to support job-killing tax hikes as Mainers are desperately trying to recover from the pandemic.  

LD 495, sponsored by Rep. Laurie Osher (D), seeks to increase Maine’s personal income tax rate from 7.15% to 8.35%. It would also add an additional bracket at a rate of 11.15% for individual filers whose income is over $100,000 and couples whose income is over $200,000. This would impact about 12% of households in the state. 

Sen. Joseph Baldacci (D) introduced another income tax hike in his chamber. If enacted, LD 532 would increase the top income tax rate to 7.95% and impose a tax rate of 10.15% on capital gains and dividends. 

These proposed bills would drive people, jobs, and investment away from Maine, and that’s something that the Maine economy cannot afford as Mainers to recover a year after the pandemic hit.  

“These proposals come at a time when the Maine economy is struggling to cope with the impact of the pandemic,” said Michael Allen, associate commissioner for tax policy at the Maine Department of Administrative and Financial Services. “While we are seeing some positive signs, avoiding tax increases of this magnitude is an important component in well positioning the state to economically rebound quickly and strongly.” 

In a statement to the Committee on Taxation, David Clough, Maine state director for the National Federation of Independent Business, said the legislation would “significantly increase taxes on thousands of Maine small business owners, because the income of most small businesses is passed through and taxed on the owners’ personal 1040 tax return.” The Maine chapter of NFIB represents nearly 3,000 small businesses state-wide.  

Mainers have suffered due to the pandemic-driven downturn. Mainers need a tax cut, not an increase. LDs 495 and 532 would make Maine a much less attractive place for businesses to invest and employers to create job opportunities. If lawmakers in Maine want to help their constituents from the pandemic, they will reject these misguided tax hikes.