Sec. 3. 36 MRSA §3321, sub-§2, as enacted by PL 2001, c. 688, §8, is amended to read:

2. Method of calculation; inflation index defined. The inflation index for 2003 is 1.118, representing annual inflation adjustments for the years 1999 to 2002, inclusive. Starting in 2004 and every year thereafter, the inflation index is the Consumer Price Index as defined in section 5402, subsection 1 for the calendar year ending on the December 31st immediately preceding the calculation date, divided by the Consumer Price Index for the prior calendar year. As used in this subsection, "Consumer Price Index" means the average over a 12-month period of the National Consumer Price Index, not seasonally adjusted, published monthly by the United States Department of Labor, Bureau of Labor Statistics and designated as the "National Consumer Price Index for All Urban Consumers - United States City Average."

Sec. 4. 36 MRSA §5111, as amended by PL 1999, c. 731, Pt. T, §§1 to 7, is repealed.

Sec. 5. 36 MRSA §5111-A, as repealed and replaced by PL 1987, c. 819, §3, is repealed.

Sec. 6. 36 MRSA §5111-C is enacted to read:

§5111-C.__Imposition and rate of tax

1.__Resident.__A tax is imposed for each taxable year beginning on or after January 1, 2006 on the Maine taxable income of every resident individual of this State.__If Maine taxable income is:

A.__Less than the federal poverty level, the tax is $0;