Income tax takes money from us based upon income, and it does so in a way that adjusts immediately. Lose my job, retire, or become disabled? My income goes down and my income tax immediately follows. Property tax and sales tax do not adjust. Property tax also affects rental rates.

The income tax, especially with workplace withholding, takes from those able to pay as they are able to pay. The sense of “progressive” is that every household pays the same on the first $20,000. A household that earns $20,000 more in the same period of time pays a higher percentage on the second $20,000. The rate “progresses” with the capacity to pay.

We could, hypothetically, charge 1 percent on the first $20,000 of income, so everyone pays something. Then for each increment of $20,000, we could add 2 percent. So 1 percent of the first $20,000; 3 perent for the second $20,000; 5 percent for the income between $40,000 and $60,000; and so on, up to $100,000.

A household with income of $100,000 would pay $5,000, a tax burden of 5 percent, less than the current proposal before our Legislature. A family earning $50,000 would pay $1,300, 2.6 percent of its income, far less than the proposal.

How to treat higher income earners? For example, all income over $100,000 could be taxed at 11 percent. According to census data for Maine, households over $100,000 comprise our top 14 percent; households over $150,000, our top 5 percent; and over $200,000, our top 2 percent. With this hypothetical model, before any deductions or credit for contributions, a household earning $150,000 would have a tax burden of $10,500 or 7 percent. Those with $200,000 income would pay $16,000 or 8 percent. Only the top 2 percent of Mainers would pay more than that.

Jim Perkins

Wayne

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