For tax reform to work, now that Gov. Paul LePage’s big plan is out on the table, we need more ideas and discussion. Ideally, Democratic legislators would have a plan, and Republican lawmakers — who’ve demonstrated independence in the past — should propose one, too.

Good legislation comes from competing plans that include specifics, not the bromides and sound bites we’re heard so far. LePage, for instance, says his plan will make Maine “more competitive.” Where’s the evidence? And what’s the cost for the average taxpayer?

Sen. Roger Katz, R-Augusta, says the current tax code is “antiquated,” that we should bring it up to date by charging a lot more in sales tax and a lot less in income tax. One wonders. The sales tax is 18 years older than the income tax, so in what sense is it the income tax that’s “antiquated?”

Could it just be that taxpayers in Katz’s bracket would come out far ahead if we scrapped the progressive income tax? Could LePage’s support for terminating homestead property benefits for everyone younger than 65 be linked to his turning 65 a year ago?

Ah, yes. When it comes to the tax code, there’s no interest like self-interest. Which is why it’s doubly important that any tax plan be subjected to real scrutiny and public discussion — not like the $500 million tax cut whisked through, with bipartisan support, in the 2011 session’s final days, with Mainers largely ignorant of its contents.

So here are some tax ideas, free for the taking.

On revenue sharing, the 5 percent designated for municipalities from sales and income taxes, we must be clear — there should be no reduction. This is a longstanding compact between the state and its cities and towns, and if there’s not enough revenue — as LePage insists — the state needs to find some more, not cut taxes further, as he’s again proposing.

But the distribution of revenue sharing is another matter. The state has four principal tools for property tax relief — school aid; revenue sharing; the “circuit breaker” reimbursement, now a tax credit; and the homestead exemption — $10,000 on every resident tax bill.

LePage insists revenue sharing can contribute to higher municipal spending rather than provide tax relief. Municipal officials disagree. But if we funneled revenue sharing into the homestead, which would produce a much bigger exemption, on the order of $40,000, that objection would disappear. It’s worth a look, and might guarantee revenue sharing’s permanence. Future lawmakers would be reluctant to eliminate benefits every resident homeowner counts on.

LePage did endorse one certifiably new idea — taxing nonprofits, now exempt from property tax as “charitable” organizations. The provision has no chance because LePage set the exemption far too low, at $500,000 of assessed value, sweeping up community land trusts and summer camps.

The nonprofits that should be paying property taxes are much larger — chiefly hospitals and private colleges, which are often their area’s largest employers, and have major assets. Having them pay nothing to support fire and police protection, and local schools, makes no sense.

Third, we could take a leaf from former gubernatorial candidate Eliot Cutler’s book and try a seasonal sales tax. LePage’s plan to raise the sales tax rate to 6.5 percent will never pass the Republican Senate, but we could install that rate, or one slightly higher, during 10 weeks of the summer, or perhaps through leaf season. The millions of visitors who flock to Maine would pay a rate closer to that of their home states, while Mainers could time big purchases — cars, home improvements and appliances — for the off-season. With modern data systems, we could do it.

Finally, we should make the income more progressive, not, as LePage suggests, less so. More brackets that rise with income are essential to a fair tax system. The wealthiest Mainers do not need a tax break; they’re already paying a far smaller proportion of income to the state than those with the lowest incomes.

Restoring a top rate of 10 percent, which Maine had at one time, would make sense. That’s what Minnesota has done, for instance, and its economy is performing much better than, for instance, neighboring Wisconsin, which cut income taxes and is now running big deficits.

LePage’s plan is the same “Trojan horse” of bringing the top rate down that began in the Reagan years, and it has to stop. Yet it will stop only if people, and their representatives, start talking about tax fairness again.

There are more ideas that might work. It would be nice to hear some over the next few months.

Douglas Rooks has covered the State House for 30 years. He can be reached at [email protected]


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