A Democrat-led bill restructuring Maine’s income tax brackets is officially set to go before the Legislature’s Taxation Committee for a public hearing today.

If approved, this proposal would result in higher taxes on the state’s individuals who earn more than $144,500 per year.

The public hearing for this bill will be held on Thursday, February 27 at 1pm at the State House in Room 127. Testimony can also be submitted online at: www.mainelegislature.org/testimony

LD 229 — An Act to Bring Fairness in Income Taxes to Maine Families by Adjusting the Tax Brackets and Tax Rates — was sponsored by Rep. Ann Higgins Matlack (D-St. George). The progressive tax scheme is also cosponsored by Rep. Anne P. Graham (D-North Yarmouth), Rep. Lori K. Gramlich (D-Old Orchard Beach), Rep. Julia A.G. McCabe (D-Lewiston), Rep. Amy J. Roeder (D-Bangor), and Rep. Melanie F. Sachs (D-Freeport).

If approved, this proposal would see the state’s highest earners taxed by up to 1.05 percent more than they currently are, bringing Maine’s maximum tax rate to 8.2 percent.

To accomplish this, three new tax brackets would be added to encompass individuals earning over $144,500, heads of household earning more than $216,750, and married couples making over $289,000.

The proposed law would also nearly double the upper threshold for the state’s lowest income tax bracket, allowing a broader swath of Mainers to qualify for it.

Not only would this law create several higher tax brackets, but it would also institute a calculating change to how the income of Maine’s top earners is taxed.

Under Maine’s current income tax system, the tax rate for a given bracket is applied only to the income earned over the upper-threshold of the previous bracket.

For example, an individual earning $49,000 would be taxed at a rate of 5.8 percent on the first $21,050 of their income and at a rate of 6.75 percent on the remaining $27,950.

This would change for some earners, however, under LD 229.

To offset the lower rates that high earners would otherwise be paying on a portion of their income, the rates for the new brackets were set in such a way that they would effectively result in the entirety of top earners’ income being taxed at higher rates than lower earners’ income, not just the portions of their annual income that are above a given threshold.

Click Here for More Information on LD 229

This is not the first time that Maine lawmakers have attempted to restructure the state’s income tax brackets so as to impose a higher rate on top earners while simultaneously expanding the lower brackets.

Ultimately vetoed by Gov. Janet Mills (D), a bill passed by lawmakers in the 131st Legislature employed many of the same tactics seen in the bill currently before the Taxation Committee, LD 229.

Gov. Mills explained in her veto letter that she felt the bill did not “deliver meaningful tax relief” to low-income Mainers.” She also argued that it would disrupt the stability of the state’s tax revenue due to the volatility of the highest-earners’ income sources.

Want to learn more about the bill up for a public hearing this Thursday? Check out this story from the Maine Wire going into more detail: Tax the Rich — Democrat Lawmakers Look to Restructure Maine’s Income Tax Brackets, Raise Taxes on Top Earners