Rationale:

Why lower income taxes?  Do we need to jumpstart Maine's economy with tax cuts?  Yes, we do.

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The difference between Jim and other candidates is that the Libby campaign will be honest and transparent. As you can see in the graph above, according to the Federal Reserve, real household income in Maine has been declining since 2021. Observers should ask why that would be, given that "household median income" is relatively stable. The answer is the word "real." Real median household income deducts inflation, and it demonstrates that the effect of inflation is cumulative. Real median household income accounts for inflation but nominal median household income does not.  It is very easy to manipulate statistical drivers. Inflation squeezes family and small business budgets. Just because the rate of increase of inflation is down from the 9% peak, overall inflation is still rising, and the Federal Reserve is currently expanding the money supply, which dilutes the value of the dollar. Unfortunately, every time we lower interest rates, the Federal Reserve raises the "M1" money supply to do it.  That de-values dollars you have saved, which is especially unfair to people who have saved all their lives but are now on a fixed income.

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Add declining real income together with falling corporate income tax collections in Maine, and you'll begin to see a pattern.  According to the Maine Department of Administrative and Financial Services, "corporate income tax receipts were $29.2 million (27.7 percent) under budget in April of 2025 and $65.0 million under budget for the fiscal year (16.7 percent)." Refunds were also over budget (negative variance) for the month by $7.4 million, again according to the department.  We are driving businesses and investment out of Maine.

 

An income tax reduction would immediately help stabilize real household income, and it would also relieve the pressure that Maine government has caused due to state policy-driven escalations in energy costs.

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Maine is a state with many types of taxes. Maine's progressive income tax is higher than most other states in the nation.  MaineBiz reported in 2024 that Maine was 4th highest in total taxes in the United States, and is #1 for property tax burden.  The combination of Maine's income and property taxes are the strongest variables affecting Mainers, and that is why Maine citizens need immediate relief in both areas.  Unfortunately, diluted dollars (inflation) helped cause home prices to rise, along with steady demand. Some people benefitted by selling their homes.  However, people on fixed incomes were caught with a higher home valuation, and that led to higher property taxes.

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The easiest and best means to lower the property tax in Maine in the short term is through raising the already existing Maine Homestead Exemption.  Currently, the program exempts $25,000 from your property taxes, as long as you have lived in the home for the past 12 months.  According to the Portland Press Herald, the median assessed home value has risen to $390,000, an all-time record, but the Homestead exemption has not been increased by the state government. In other words, many Mainers are a victim of home value inflation.  It's not some myth that people are being driven from their homes. It's a fact.

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Tax reductions increase disposable income, and will increase economic activity and economic development.  The combination of increasing the Homestead Exemption plus decreasing Maine income taxes will have an immediate positive effect in the economy.  The reduction in Maine revenues from the 20% income tax reduction will be less than a half billion dollars in the first two-year cycle, since currently tax revenue to the state is increasing significantly.  When including the repeal of the new tax on senior pensions (current law phases out the exemption for certain income classes), the budget cut will equate to just under one billion dollars.  This budget cut will be achieved by rightsizing government, reducing the massive amount of no-bid contracts that have clearly wasted vital tax dollars, and achieving productivity gains through AI training. More taxable transactions will occur when tax cuts are delivered to the economy.  In addition, tax payment delinquencies will naturally be reduced. These changes will be carried forward into the second biennial budget, so that Mainers can consistently plan their own expenditures rather than get hammered with new taxes every term.  One billion in total income tax relief will make a real difference to ordinary Mainers.​​

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