The Universal Notebook: Tax dodging, the great American pastime
One of the curious contradictions of life in these United States is the apparent acceptability of avoiding taxes.
Taxes we avoid are taxes others must pay and, since the tax system is designed by and for the wealthy and corporations, it’s the rest of us who foot the bill for the tax dodgers.
In Yarmouth, town officials are having trouble getting NextEra Energy to even discuss the taxes it owes on Wyman Station out at the end of Cousins Island. It doesn’t surprise me that NextEra doesn’t want to talk about taxes, since it is one of the "Dirty 30," corporations like Verizon, General Electric, Boeing, DuPont, Wells Fargo and Con Ed identified by the U.S. Public Interest Group and Citizens for Tax Justice as paying no taxes in 2012.
The only reason we let that eyesore plant sit out there and pollute is that it kept Yarmouth taxes low for years, so we are complicit in its very existence. But as the plant depreciates and the tax burden shifts from NextEra to residential taxpayers, I’m hoping Yarmouth gets to take Wyman Station for back taxes. Then maybe we can tear it down and make better public use of that property.
We also learned last week that while Apple may have paid $6 billion in taxes last year, it has also dodged some $9 billion through a complex offshore shell game involving companies with no employees.
Was that why Mitt Romney didn’t want to release his tax filings? Playing tax dodge games in the Cayman Islands may be perfectly legal, but it is also totally unpatriotic. We need to eliminate offshore accounts and make corporations accountable for the taxes they really owe.
Getting those who do not now pay their fair share to pony up is also the motive of the so-called "Gang of 11" tax-reform plan in the state Legislature, a plan authored by independent state Sen. Dick Woodbury of Yarmouth.
“The goal of this tax overhaul,” explains a draft overview of Woodbury's bill, “is to export more of the tax burden to non-residents, while reducing the tax burden on Mainers.”
Amen to that.
Where Gov. LePage’s proposed state budget would simply cut revenue sharing and shift costs to municipalities, requiring cities and towns to raise taxes or cut services, the Woodbury plan represents real, structural tax reform.
Woodbury’s plan would cut the state income tax to 4 percent, eliminate the estate tax, raise the sales tax and apply it much more broadly to goods and services, and give Maine residents larger homestead exemptions to offset the increased sales taxes. The plan would achieve greater tax fairness, making out-of-staters help pay the bills.
Sure, the folks in the big shingle-style cottages along the coast pay hefty taxes on their Maine retreats, but their taxes are not fair in proportion to what natives pay.
“In general,” the Woodbury plan overview explains, “non-residents pay no state income taxes in Maine; limited sales taxes, because many consumer purchases are tax-exempt; and limited property taxes, because vacation homes are concentrated in locations with lower than average property tax mil rates.”
It’s that last point that gets to the crux of the issue.
Redistribution of tax dollars takes place largely through the school funding formula. Property-rich towns along the coast can raise state-mandated levels of money for Essential Programs and Services with far lower mil rates than poorer towns. So while a town like Lisbon might have to appropriate $6.37 per $1,000 of property valuation for education, a town such Mt. Desert can get away with appropriating as a little as $1.12 per $1,000.
The Gang of 11 tax plan is a bipartisan effort at true tax reform. There’s something in it for everyone to like and for everyone to dislike. But the bottom line is that it’s a lot fairer than the system we now have in place.
Maybe we should put Dick Woodbury to work overhauling the federal tax code so we don’t end up with NextEra and Apple dodging their tax obligations either.