AUGUSTA – Gov. Paul Le- Page promoted his plan to exempt military pensions from the state’s income tax Tuesday, saying the proposal is part of a larger goal to attract investment from new residents while ensuring that veterans return here after their service.

“The point here is that the military not only protects us and allows us to keep our liberties and our freedom, but they have an awful lot to add and give back when they come home,” LePage said in a State House news conference, accompanied by a number of veterans. “I think that we can have our veterans start new businesses, join existing companies and, as you’ve heard, there are a few smart ones here that could invent a lot of stuff.”

The exemption is included in the governor’s two-year, $6.3 billion budget and related tax overhaul. The provision is one of the least controversial in a tax plan that was widely assailed during public hearings by the Legislature’s budget writing committee over the past two weeks. The plan would cut income taxes, eliminate revenue sharing with municipalities, increase the sales tax and extend the sales tax to a wide array of services.

LePage is scheduled to discuss the tax plan in a town hall meeting Wednesday evening at Bangor’s Husson University. His news conference effectively set the table for that event by homing on a single provision that is positioned to receive broad bipartisan support.

“It’s just really good that we try to look forward and try to bring back those who were born and brought up here, but now live in other states,” he said.

Maine would join 22 other states that exempt military pensions. Nine of those states, including New Hampshire, do not have an income tax – which LePage has said is his ultimate goal.


Removing the income tax would immediately benefit 8,000 military pension recipients who already claim Maine as a residence. According to data from the U.S. Department of Veterans Affairs, there are 127,234 military veterans in Maine, accounting for 10 percent of the state’s population. Forty-seven percent of the state’s veteran population is age 65 or older, according to federal data.

Maine’s percentage of military veterans age 65 and older is equal to that of New Hampshire. The Granite State, which does tax annuity and investment income, has over 113,000 military veterans.

The Maine Legislature has considered, and passed, a number of bills that would have exempted military pensions from the income tax, including one last session. However, none of those proposals was ever funded. According to the administration, exempting the military pension income would cost the state about $9.6 million over two years.

Amedeo J. Lauria of the American Legion of Maine said he had testified in support of the previous bills, and he hoped LePage’s plan would be funded.

The military pension provision is among the least controversial initiatives in the governor’s budget. Rep. Michael Devin, D-Newcastle, a retired commander in the U.S. Naval Reserves, declined to comment on the governor’s entire budget, but said exempting military pensions “makes sense.”

“Veterans already look favorably upon Maine,” Devin said. “This will only help.”


LePage addressed opposition to his budget Tuesday, saying that criticism from “elected officials” about eliminating revenue sharing was “offensive.” He said his plan would replace revenue sharing with direct property tax relief.

“The communities are concerned about the communities,” he said. “The governor is concerned about the people in the communities.”

LePage will hold his town hall meeting on the budget at 6 p.m. Wednesday in Gracie Theatre at Husson University.


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