AUGUSTA — Sen. Tom Saviello wants to raise the state’s tax on earned income of more than $250,000, but he’ll probably face opposition from heavy hitters in his party, including Gov. Paul LePage.
The Wilton Republican said Wednesday that he has submitted legislation to raise the tax on that income from 7.95 percent to 8.5 percent. The higher rate was in effect until 2011, when the Legislature, controlled then by Republicans, approved a budget from LePage with tax cuts that scaled the rate back to its present level.
“When I was on the campaign trail, people asked the question,” Saviello said in an interview. “They just couldn’t understand why somebody making more than $250,000 of income couldn’t be taxed more.”
According to Michael Allen, LePage’s associate commissioner of tax policy, the tax change would affect 4,100 Mainers and generate $5 million.
The rate would apply only to income earned from wages and salaries, not from dividends, business, rentals or other sources.
Saviello will have to find a representative, however, to introduce the measure: The Maine Constitution says all bills raising revenue must originate in the House of Representatives.
Saviello said he could switch the sponsor’s name to Rep. L. Gary Knight, R-Livermore Falls — who said he’d probably put his name on the bill for Saviello once he sees it on paper. The bill is not a public document yet, as it is being processed by the Legislature’s Office of the Revisor of Statutes.
Knight said he supports the 2011 LePage tax cuts and would prefer to see everyone’s taxes decrease; but he hopes Saviello’s proposal can bridge gaps between Republicans and Democrats, who have frequently characterized LePage’s changes as “tax cuts for the rich.”
Maine Revenue Services has estimated that the tax cuts reduced the tax burden for the top 10 percent of Maine earners — more than 67,500 tax families all making around $119,000 or more — by more than $63 million annually. Saviello’s plan would be a small bite into that.
The cuts also eliminated taxes for 70,000 low-income Mainers, by moving a 2 percent income tax rate to zero. The top 10 percent of income earners paid more as a percentage of Maine’s overall tax burden after the changes than before.
“I hope it puts an end to this constant bickering that all we’re doing is looking out for the wealthy,” Knight said of Saviello’s proposal. “If this is what brings the two parties to work together to grow the state, then we can do that.”
A former Democrat who left that party in 2005, Saviello is known as one of the more moderate legislators in Augusta. In his caucus, Senate Minority Leader Michael Thibodeau, R-Winterport, said Saviello’s proposal “isn’t something I’d gravitate towards,” but that may not matter.
“Tom’s an independent thinker — always has been and always will be,” Thibodeau said. “Whether he gets broad-based Republican support for this or not, he’s going to have a public hearing and promote it.”
LePage spokeswoman Adrienne Bennett said she wouldn’t comment on the legislation until the language is available, but she said LePage probably wil stand firm in preserving rate cuts he advocated.
“I don’t anticipate any change on that,” Bennett said.
House Minority Leader Kenneth Fredette, R-Newport, said Saviello probably will find “very little support” from House Republicans. He said Maine has a reputation as a high-tax state. According to the nonpartisan Tax Foundation, in 2010, Mainers paid an average of 10.3 percent of income in taxes.
“In a bipartisan fashion, we took action to address that issue last session,” Fredette said. “To go back in and start tweaking with it again before the cuts have virtually even started is irresponsible.”
Democrats were more enthusiastic. Jodi Quintero, a spokeswoman for Speaker of the House Mark Eves, D-North Berwick, said “those kinds of solutions” — tax adjustments — will be on Democrats’ radar. Though they haven’t seen Saviello’s proposal on paper, she said Eves’ office supports the concept and is encouraged by Saviello’s outlook.
Saviello said he’d like to get Senate Majority Leader Seth Goodall, D-Richmond, to co-sponsor the bill. Goodall said he’s had conversations with Saviello, but he hasn’t yet seen the measure.
Democratic leaders have been vague about their plans for taxes. Saviello’s announced plan is the first one to bite into the LePage cuts, if slightly.
Senate President Justin Alfond, D-Portland, said at a Wednesday media briefing that Democrats “are going to look at all of our options” surrounding revenue, and “Mainers expect us to do that” as a budgetary solution.
Michael Shepherd — 370-7652