Maine Legislature Overturns Question 2's 3% Income Tax Surcharge

July 19, 2017 Alerts and Newsletters

Verrill Dana and its affiliate Maine Street Solutions were pleased to serve as legislative and grassroots consultants to support the Maine State Chamber of Commerce and the Keep Maine Competitive Coalition's effort to repeal Question 2. As you recall, Question 2 increased Maine's top income tax rate by 3% on individuals or households who report taxable income of more than $200,000. Our collective efforts to eliminate the tax hike were successful.

The Chamber and the Coalition strongly believed that increasing the State's marginal income tax rate to 10.15% (nearly the highest in the nation) would have a devastating impact on Maine. The rate hike would have undermined Maine small businesses' ability to compete, and posed a significant disincentive for recruiting and retaining professionals.

Question 2 was tied to the goal of increased funding for K-12 education. By its terms, proceeds from the 3% surtax were supposed to be set aside for public schools. From the beginning, the Chamber adopted the objective of honoring the goal of increased education funding without damaging the Maine economy.

After months of negotiations, the Legislature successfully repealed Question 2, while providing over $160 million in additional state funds to public education.

Throughout this lengthy process, numerous clients and friends of Verrill Dana expressed their concerns to legislators about the many ways that a 10.15% income tax rate could undermine Maine's economy. Those efforts made a difference, and helped erode arguments and lobbying by Question 2's proponents. Thanks to those of you who took action.

Please contact us if you'd like further information or have any questions about this repeal or about Maine's new budget.

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