The dispute over tax policy continues at the State House.
The Democrat- controlled Maine House of Representatives has rejected a Senate-passed bill that would bring the state’s income tax laws into compliance with federal changes that were made in December. And in a new twist, House Democrats are proposing a move that will affect large businesses as a way to offset expected school funding losses for local towns.
House Democrats are in favor of adopting all of the provisions passed by Congress except one, which involves something called “bonus depreciation.” It allows businesses that make more than a $2.5 million investment in equipment in a year to speed up the deduction they can take on their taxes.
Democrats say that would free up about $20 million that they would use to help alleviate the loss of state aid to local schools. But that doesn’t sit well with House Republican Leader Ken Fredette.
“What we see is the far left, progressive, Bernie Sanders wing of Democrats in the House who want to, you know, continue to drive forward policies that aren’t necessarily related to tax conformity policies,” he says.
Fredette says House Republicans support full conformity for the current two-year budget cycle and that the issue of school funding should be considered later.
Senate Democrats had supported Republicans on the idea of conforming with all of the federal tax changes, but Senate Democratic Leader Justin Alfond says his caucus has yet to discuss the House Democrats’ plan.
“While we are trying to ensure that businesses in Maine have all of the advantages that any other state has, we also have to make sure that we aren’t raising property taxes and we are strengthening to our schools,” he says. “So yes, the piece around education is very important to Democrats.”
Senate President Mike Thibodeau says his caucus members are also concerned about school funding, but he says it’s important that Maine adopt all of the federal tax changes in order to encourage economic growth and jobs in the state.
“I value every job in this state and we cannot turn our backs on one employer,” he says. “We can’t see one employer decide that our tax policies aren’t as good as they are in a neighboring state and move them jobs. So we are focused on keeping and retaining every job.”
House Speaker Mark Eves says Democrats developed their plan over several days as a way to address both job creation and funding for local schools. He says he’s confident that a compromise can be worked out that will garner enough votes to become law.
“The rhetoric often gets heated around here, but I think it is the leaders’ job to really make sure that cooler heads prevail, stay at the table and negotiate it,” he says. “We have done this many, many times before and we are going to do it again.”
The House and Senate have now adopted differing versions of the tax legislation and one of the two chambers will have to back down in order move toward a compromise.
