A Constitutional Opportunity to Undo Economic Damage

Maine voters – by a margin of less than 1 percent – approved a 3 percent income tax “surcharge” on incomes greater than $200,000 for the purported purpose of funding public education. The Maine Office of Fiscal and Program Review estimated the measure would raise $142 million in the first year. Voters also approved (with an 11 point margin) an increase in the minimum wage to $12 per hour from $7.50 by 2020, adjusted for inflation each year following.  For tipped workers, the minimum wage jumps from $3.25 per hour to $5 this year—and by $1 per year until equal with other workers. Good intentions aside, both measures pose a significant threat to Maine’s economic well-being.

This 3 percentage point hike in the personal income tax rate to 10.15 percent qualifies Maine as number 4 in terms of highest personal income tax rates. Only California, New York and Oregon impose higher rates. Unsurprisingly, the level of income tax strongly inversely correlates with domestic migration. According to the latest numbers from the Census Bureau, of the nine states with no personal income tax, seven experienced positive domestic migration in 2015 totaling more than 460,000. On the other hand, eight of the nine states with the highest personal income tax rates experienced net domestic out-migration exceeding 361,000 in aggregate.  Maine fared not much better, gaining a paltry 2,169 people from domestic migration.

Read more at The Maine Wire.

Griffith, Joel. (2017, Jan. 19). A Constitutional Opportunity to Undo Economic Damage. Retrieved from http://www.themainewire.com/2017/01/constitutional-opportunity-undo-economic-damage/