Working families pay more than a fair share of taxes

To the Editor;
Working families in Maine pay more than their fair share of taxes – and it’s about to get worse.
Taxed Enough Already? In at least one respect, heck yes! In an earlier letter we considered the fairest way to split up tax burdens on citizens. A flat tax implies that both the rich man and the poor man pay the same rate. Yes, the rich man will pay (a lot) more, but the poor man is likely to feel a lot more pain paying his taxes. I like the notion that a “fair” tax tends to equalize the pain between the rich and everyone else.
Who is “rich” and who is “poor”? A common approach to define “rich”, “middle class” and “poor” is to divide working-age families into income groups — typically by fifths. In Maine (in 2015), the family income of the lowest fifth of families was less than $19,000. The average Maine family (earning $37,500) is in the middle fifth. The top fifth of families earned over $82,000. The top 4 percent of families earned $150,000 to $360,000. The top 1 percent of families earned more than $360,000 (ten times as much as the average Maine family}. Let’s think of that 4 percent as “well off to rich,” and the top 1 percent as “rich to really rich.”
Now let’s consider who pays the greater share of their family income in state and local taxes. The State of Maine has two major sources of tax revenue — Income taxes are about 42 percent of the total tax take. Sales taxes are 50 percent of the total tax take. Locally, towns have only one major source of tax revenue — property taxes.
So, for the average Maine family (earning $37,500 — that’s most of us working people in Piscataquis County), most of our state and local tax bite comes from sales taxes, property taxes and personal income taxes. As a percent of our total family income, the average family spends about 4 percent of their income on sales taxes, 3 percent on property taxes, and 2 percent on income taxes. Altogether the average family pays about 9.5 percent of their income on state and local taxes.
Consider the family in the top 1 percent. They pay about 9.1 percent of their income in state and local taxes. (less than the average family. But wait, it gets worse!) That top 1 percent family? They also get to deduct all of those state and local taxes from their federal taxes. That knocks another 1.5 percent off of their effective state tax bill. This means that while the average family ends up paying about 9.5 percent in state and local taxes, while the really well off 1 percent end up paying only 7.5 percent! (of course anybody can deduct state and local taxes from their federal tax bill — but only if you itemize. Most families earning $37,500 just take standard deductions, so the deduction from federal taxes doesn’t apply to most families — tax breaks that appear to benefit everyone but, in practice, only benefit the very well off. As someone once said “Ah, the majesty of the law. Neither the rich man nor the poor man are permitted to sleep under the bridges.”
If the average family pays 9.5 percent of their family income in state taxes, and the top 1 percent pays only 7.5 percent, does that seem right to you? It doesn’t seem fair to me. In fact, it’s downright regressive. It strikes me that working people are getting screwed (and it’s about to get even worse!). More on that later.
Let me know what you think. You can reach me any time at chrism@roadrunner.com

Chris Maas
Dover-Foxcroft