Yesterday, the Maine Legislature referred the tax conformity package proposed by Governor LePage to both the Appropriations and Taxation committees for further consideration and initial votes. There, it will face its first real scrutiny.
As I explained in a recent column, the bill includes a ridiculous $6-$10 million tax giveaway to large, mostly out-of-state corporations through a complicated mechanism called “bonus depreciation.” Basically, the provision allows certain large firms to get a tax benefit by pretending that business equipment they purchased in the last year is depreciating at a faster rate than it actually is.
The idea behind the policy, when it’s applied proactively, is to stimulate corporate investment, but the legislation as proposed would apply the bonus retroactively, only benefiting companies who already spent money this way in 2014. LePage’s proposal is, therefore, purely a multi-million-dollar corporate handout with no potential return for the state.
While the measure seems mostly to be flying under the radar (other than my column, there’s been virtually no mention of the handout in the media, and no opposition has been voiced so far by legislative leaders), some lawmakers are gearing up to oppose the giveaway.
“When we’re looking at totally eliminating revenue sharing to towns in the governor’s budget and massive cuts to drugs for elderly, we should be thinking about what’s a higher priority for us,” said Representative Matt Moonen, a Democrat from Portland who serves on the Taxation Committee, when asked about the bill. “Is it towns, cities, drugs for elderly or giving away something in the range of $10 million to big corporations?”
“You’d be hard pressed to find a small business that made $2 million in business equipment purchases last year. This bill benefits big businesses, almost all of them out of state. Is that where we’d want our tax dollars to go?”
Moonen also noted that because the bill is being submitted as emergency legislation, requiring two-thirds support for passage, it would take the opposition of only a bit more than one third of the House or Senate to prevent it from becoming law.