Maine Gov. Paul LePage is pushing a bill that would eliminate the state's income tax, a move that would lead to more than a $1 billion revenue loss for the state.
The Republican governor is proposing a Constitutional amendment that would eliminate the income tax starting in 2020 and prohibit the State Legislature from enacting any income tax in the future.
The amendment, which LePage says would return $1.2 billion to taxpayers, would require a two-thirds vote of the legislature followed by approval in a statewide referendum this November.
LePage said in a May 4 statement he is aiming to phase the income tax out over time by reducing the rate from 7.95% to 5.75% and cut it to 4% by the end of 2018. He said the state has already reduced the top rate from 8.5% to 7.95% and that 70,000 low-income residents no longer pay the income tax.
"We have taken a cautious approach toward eliminating the income tax," said LePage. "We are phasing it out over time until it is gone."
Legislators are in the midst of a fight with LePage over his withholding of $11.5 million in voter-approved bonds for land conservation because the governor wants to increase harvesting of timber on state-owned lands.
Republican State Sen. Roger Katz and eight other lawmakers from both political parties introduced legislation in late April that would force LePage to release voter-approved bonds, "absent extraordinary circumstances." Voters approved all six general obligation bond propositions on the ballot last November, which authorized $50 million in new borrowing.
Maine GO bonds are rated Aa2 by Moody's Investors Service and AA by Standard & Poor's.
