An Act To Provide Tax Fairness to Maine's Middle Class and Working Families
Sec. 1. 36 MRSA §200, sub-§1, ¶A, as enacted by PL 1997, c. 744, §1, is amended to read:
(1) For the overall income distribution, using a measure of system-wide incidence that appropriately measures equality and inequality;
(2) By income classes, including, at a minimum, deciles of the income distribution; and
(3) By other appropriate taxpayer characteristics.
The report must include a calculation of the average effective tax rate on state and local taxes paid by the top 1% of tax families and the bottom 99% of tax families. For purposes of this paragraph, "average effective tax rate on state and local taxes paid" and "tax family" have the same meaning as in section 5111-C, subsection 1.
Sec. 2. 36 MRSA §683, sub-§1-B, as enacted by PL 2015, c. 267, Pt. J, §1, is amended to read:
Sec. 3. 36 MRSA §5111-C is enacted to read:
§ 5111-C. Tax equalization assessment
(1) The numerator consists of the sum of the following calculations performed for each income class:
(a) The sum of the amounts specified in subdivisions (i), (ii) and (iii), multiplied by a fraction the numerator of which is the number of tax families in the income class and the denominator of which is the expanded income of the income class. The amounts summed are:
(i) The income tax liability;
(ii) Property taxes accrued on a homestead; and
(iii) Sales taxes paid.
(2) The denominator consists of the total taxable families for all income classes.
As used in this paragraph, "income class" means a decile of tax families, except that for tax families above the 90th percentile there are 3 income classes defined as the following: the 90th to 95th percentile; the 95th to 99th percentile; and the 99th to 100th percentile.
Sec. 4. 36 MRSA §5219-S, sub-§§1 to 3, as amended by PL 2009, c. 213, Pt. BBBB, §16, are further amended to read:
Sec. 5. 36 MRSA §5219-KK, sub-§2-A, as enacted by PL 2017, c. 474, Pt. B, §16, is amended to read:
This bill, for tax years beginning on or after January 1, 2020, requires payment of a tax equalization assessment if a tax family has an expanded income of at least $250,000 for a tax family filing as a single individual, $325,000 for a tax family filing as a head of a household or $400,000 for a tax family filing a married joint return or filing a joint return as a surviving spouse, and an effective tax rate that is less than the average effective tax rate on state and local taxes paid by the bottom 99% of tax families. The tax equalization assessment is an amount equal to the difference in the average effective tax rate on state and local taxes paid, calculated by decile, and a tax family's individual effective tax rate on state and local taxes paid, the sum of which is multiplied by a tax family's expanded income.
This bill also, for property tax years beginning on or after April 1, 2020, increases the total amount of the Maine resident homestead property tax exemption by $5,000 to $25,000 of the just value of the homestead. Finally, this bill increases the earned income tax credit from 5% of the federal earned income tax credit to 10% of the federal earned income tax credit and reduces the threshold amount from 6% to 5% to qualify for the property tax fairness credit.