Gov. Paul LePage caught everyone by surprise with his sweeping tax overhaul plan. LePage threw in just about every tax reform idea except the kitchen sink.

The plan would reshape literally dozens of tax and budget lines. But its major premise is that Maine needs to dramatically reduce the income tax while equally dramatically increasing the sales tax.

While unquestionably bold, the plan has legislators jittery, particularly his staunchest Republican allies, who, just four years ago, repealed by referendum a plan enacted by Democrats under Gov. John Baldacci that did the same thing — lowering income taxes while expanding sales taxes. There were differences — the Democratic plan kept the 5 percent sales rate, while LePage would boost it to 6.5 percent — but the thrust was the same.

In particular, Senate President Mike Thibodeau, R-Winterport, won his seat in 2010 by defeating former House Majority Leader John Piotti, architect of the Democratic tax plan. Whether Thibodeau would be willing to about-face now seems, well, doubtful.

Yet leaders in both parties support the need to shift state taxes away from income and toward sales. LePage says it will “modernize” the tax code. Democrats emphasized it would make Maine “more competitive” in attracting businesses. And Democrats helped enact LePage’s $500 million income tax cut in 2011 that left the state without enough money to fund basic services, requiring “temporary” sales tax increases.

But it is true? Will cutting the income tax make Maine’s economy stronger?

One thing we know, with certainty: Relying on sales rather than income tax as the primary state revenue source will make the whole system far more regressive.

What this means is that people with the lowest incomes will pay the highest proportion of their meager incomes in state taxes. Meanwhile, lower income taxes will help the wealthiest people in Maine pay a much smaller proportion than the poorest.

We can envision this future by looking at neighboring New Hampshire, which has neither general sales nor income tax, but relies heavily on the regressive property tax. There, according to the Institute on Taxation and Economic Policy, the poorest fifth pay 8.3 percent of their incomes in state and local taxes, while the wealthiest fifth pay 2.6 percent — one-third as much.

In Maine, because of its progressive income tax, the tax burden is distributed more evenly, with the poorest paying 9.4 percent and the richest 7.5 percent. That’s better than the national average, but — if the sales tax shift occurs — we’ll be at or above the typical tax burden on the poor, twice as high as for the wealthiest.

Do we want to do this?

The theory that lowering income taxes creates an economic boom was recently tried in Kansas, where Republican Gov. Sam Brownback pushed through a 25 percent cut. The result: huge budget shortfalls, a sharply lower credit rating, and an economy lagging well behind neighboring states.

In Maine, we have, by apparent consensus, a quest for a possibly imaginary economic advantage, paired with the reality of imposing much higher taxes on working people.

We also might consider that the wealthiest 1 percent already are acquiring an ever-rising share of national and state income. Do they need a tax cut?

To discover the answer, we might want to go back to when the sales and income taxes were enacted. Both were largely intended to fund better schools without increasing property taxes. The sales tax, established in 1951 at 2 percent, arrived when Republicans controlled everything.

The income tax, enacted in 1969, was championed by the young Democratic governor, Ken Curtis, who had to convince a solidly Republican Legislature. The Republicans’ alternative was to increase the sales tax — a position former Gov. Ed Muskie advised Curtis to adopt, as less politically risky.

But Curtis insisted that asking low-income residents to bear the brunt of state taxes was unfair, and in time he won over moderate and liberal Republicans. He even credited Republicans with devising a better progressive rate structure, which had more brackets and thus increased the bite on income gradually.

Today, the issue is much the same as in 1969. We do know this: In 1970, fears about the income tax almost prevented Curtis’ re-election; he survived by just 800 votes. Yet when business interests launched a referendum in 1971 to repeal the tax, Mainers rejected it by a whopping 3-1 margin.

Taxpayers by that time had a chance to see how the income tax affected them, and saw it performing exactly as promised — putting the burden on the wealthy, not the poor. Tax fairness was achieved.

If today’s Maine Democrats and Republicans want to reject that history in favor of “modernization” or “competitiveness,” the burden of proof is on them.

Douglas Rooks has covered the State House for 30 years. He can be reached at drooks@tds.net.

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