tax reform

The Maine Legislature just pushed through a massive tax reform bill in the Pine Tree State.  This was not just a token "move the chairs around" reform bill - it was far reaching, ambitious and will genuinely help move Maine in the right direction on this issue.  The Wall Street Journal went as far as to call it the "Maine Miracle".

But here's the kicker - the bill was proposed by Democratic Governor John Baldacci, and overwhelmingly supported by Maine Democrats.  The Maine GOP naturally had several problems with the reform bill - many of which were legitimate, but at the end of the day we still have to realize that taxes were shifted from compulsory income taxes that were "progressive" and graduated, to a virtually flat income tax, with a shift to consumption taxes.

Don't get me wrong, if I were in charge of reforming the Maine tax system it would have looked dramatically different and provided a tax cut more quantifiable and more far reaching, but lets be honest here folks, this is at least a step in the right direction.

Baldacci is quite unpopular in the state, but its hard not to admire a lot of what he has done in his second term as Governor. He had barely even been sworn in again, and already he was pushing to consolidate the 152 school districts in the state down to 26.  He's also no fan of REAL ID, and was the first Governor in the United States to sign a same-sex marriage bill without being ordered to do so by a court - something I happen to consider a point in his favor.

Yes, I know, a few quality policies does not a good Governor make, and he still has things like Dirigo Health as major black marks - but still, he's done a lot right and we shouldn't be afraid to say so.

But whatever he has done right previously pales in comparison with the landmark tax reform bill he just pushed through and then signed.  The bill reforms Maine's tax structure in a number of important ways, but the crux of it comes down to the following changes:

• The states draconian and punative progressive income tax rate which topped out at 8.5% has been essentially changed to a flat tax (you heard me) of 6.5%.  The only exception to this is an additional 0.35% surtax charge for those making over a quarter of a million dollars.
• The state budget will be cut by 300 million to offset the losses, coupled with some tax loophole closings and extensions on the sales tax.

And to those critics of "tax cuts for the rich" that the new flat tax creates, Baldacci sounded off:

"Without employers, you don't have employees.  The best social services program is a job."

Incredible.  Well said, Governor.

Granted, the Republicans haven't had much of a chance to impliment this type of agenda since Jock McKernan was Governor (and he was hampered by an aggressive and hyper-partisan Democratic legislature), but it is to Baldacci's credit that he was the one - despite his party affiliation - who finally pushed through a comprehensive tax reform bill.

But, this betrays a larger question - why did Baldacci and the Democrats do this?  Are they converts of a fiscally conservative agenda (no), or is something else going on here?

The answer is pretty simple.  In 2004, Maine Republicans essentially split the Maine House and Senate 50-50 with the Democrats.  Maine is not a blue state.  Its not a red state either - as I've said before, its a gray state with a very slight blue lean, but it is completely winnable for competent Republicans with the proper message. 

But Maine Democrats rode the anti-Bush wave in 2006, and the Obama wave in 2008, and are now in complete control of every level of government.  However, now that they have power, unemployment is spiking high, wages are stagnant, young people are leaving the state and taxes are strangling the population.  Those of us in the know smelled major Republican gains in the House, Senate and even the Governor's Mansion.

Add to that the fact that Maine Republicans seem to be getting their act together.  Rather than the tired, poor choices presented to Maine voters in the 2006 election, there is actually an impressive crop of Republicans running for Governor in 2010 - cheif among them is Matt Jacobson, President and CEO of Maine & Company, an organization aimed at bringing businesses to Maine.

Jacobson has been carving out a decidedly pro-business, pro-growth, pro-jobs economic agenda for his candidacy, and it is already starting to resonate.  Indeed, Jacobson has been described as a "human jobs machine", as his position is literally devoted to doing just that - creating jobs.  In this environment, that type of economic message can quickly light on fire.

And Jacobson isn't the only one, other candidates such as Bruce Poliquin and Les Otten have cut their teeth in the business world, and will be hammering similar messages. Maine Republicans seem to have become clued into the fact that this brand of conservatism actually sells pretty well in Maine and are far more interested (for once) in talking about them now.  For the next two years Jacobson and the Maine GOP will likely be hammering that message non-stop, hoping it will sweep them back into prominence.

But in this one move, Maine Democrats attempted to cut Jacobson and other GOP primary candidates, as well as the statewide Republican message model off at the knees.

They are now able to campaign on the largest tax cut in Maine history.  They are now able to campaign on approving a budget that allocated fewer dollars than the previous year for the first time in three decades.  They can campaign on making Maine's business environment more friendly, and its tax burden less cumbersome.  Essentially, they out Republican-ed the Republicans, and may have just guaranteed themselves a continued majority for the forseeable future.

One wonders why national Democrats didn't take a similar strategy upon sweeping into power in 2008.  Imagine if the Democrats pushed for a balanced budget, fiscal discipline, and preached a more conservative fiscal policy.  After the Bush years and the gross excesses, massive government growth, huge budget deficits and fiscal irresponsibility that flowed from all that, they could have dealt a death blow to the GOP.  But they didn't do that.

Luckily for Maine Republicans, they have no such history of hypocritical behavior while in power - partly because they have been on the outside looking in for so long.  Thus, this newfound fiscal sanity by the Democrats won't necessarily be a crushing move, just a damaging one.

Fortunately (in a political sense), Maine has a long way to go in terms of taxes and business climate - they will still be in the middle of the pack for total taxation, and last year Maine was ranked as having the third worst business climate in the United States, and even this bold move won't suddenly mean Maine is out of the woods yet. 

Matt Jacobson is still a phenomenal candidate, and the Maine Democrats have already claimed about all the seats they are probably able to at this point, so 2010 is still looking up for the GOP in the Pine Tree State.

But with a bold stroke of political brilliance, the Democrats may have mitigated the damage a great deal.  I admire such a level of political accumen.

This past week, 15,677 signatures were filed with the North Dakota Secretary of State's office for the Income Tax Cut Inititiave. Sponsored by the North Dakota chapter of Americans for Prosperity, the initiative, if certified for the November ballot, would slash North Dakota's state corporate income tax rates by 15 percent and the individual income tax rates by 50 percent starting in 2009.

Apparently, North Dakota exepcts a budget surplus of anywhere between $700 million to $1 billion next year, so supporters of the initiative are looking for both tax relief and restrained government spending during these "sunny days." Smart!

But the AARP is opposing the measure because "it would hamper state and local governments’ and school boards’ ability to respond to emergencies or shifting priorities in the future." The North Dakota Farm Bureau is also opposing the measure citing "worries that it would place the burden of spending on increased property taxes." Now maybe North Dakota should start a government "rainy day fund" that is concomitant with this tax cut, but it's amazing what poor excuses are made to not cut taxes. (But I invite any North Dakotans to explain why voting Yes on this inititiave would be a bad idea.)

This will be the second income tax related ballot initiative this year, joining the Massachusetts Income Tax Repeal. While well intentioned, the Massachusetts initiative is a bit extreme as it would completely get rid of the 5.3% tax on wages.

With so much focus on the national economy during this presidential election cycle, there has been a lot of emphasis on the candidates' tax and economic growth policies. Folks in the broader national conservative movement need to realize that not only do local and state taxes have just as much of an effect on the economy as national taxes do; state and local tax, budget, government transparency, and other localized bread and butter issues can help build our farm team, as previously discussed.

Mike Huckabee has been hosting vertical day on the HuckPAC blog where candidates for office, distinguished guest and ideas talk about how to move our country forward vertically: upward, that is. Huckabee explains the concept of Vertical politics, taking America up and not down. The Governor explains in a brief You Tube video.

Representative Sam Graves (R-MO) explains why illegal immigration poses a threat to our nation's security.

A Candidate for the Texas House of Representatives Brian Walker talks about the preciousness of human life. Indiana Congressional Candidate Luke Puckett relates a personal story to explain his pro-life position.

Senator Lamar Alexander (R-TN) urges passage of the Child Custody Protection Act which protects children and parents from those who would abscond with minor children to take them across state lines to get abortions in contravention of their home state laws.

Want to talk tax reform? The original sponsor of the Fair Tax (H.R. 25) Rep. John Linder (R-GA) shows up with a post on his tax proposal.

Senator "Big" John Cornyn (R-TX) gives the answer to America's energy problems: All of the Above.

What makes this HuckPAC event interesting is that Huckabee sought posts from regular citizens. Eight were chosen. My favorite is from Brian Donegan who has a great post with some thoughtful ideas for education reform.

Mike Huckabee didn't get to be as active as he wanted in this Vertical Day due to being delayed in leaving Africa. His Daughter Sarah has a positive note on the folks behind HuckPAC, and they definitely deserve some praise.

They've managed to bring together a very distinguished guest list of posters with some fabulous posts on the issues. It represents a job well done by the Governor and all the folks at HuckPAC.

Today the congressional caucus of the GOP unveiled their “bold new economic plan” for stealing some of the wind from the democratic sails as we move forward into preparations for the general election. These plans included agressive proposals for finally pushing forward with oil and gas exploration and extraction, and a move towards long overdue tax reform.

“To protect consumers, the House GOP plan would harness new technologies and unlock America’s energy resources in the Alaskan coastal plain, deep ocean energy zones, and elsewhere to lower gas prices, create jobs, and break America’s dependence on foreign sources of energy. To protect taxpayers from pork-barreling politicians and wasteful Washington spending, our plan would establish an immediate earmark moratorium and prohibit federal spending from growing faster than the overall economy. And to protect American families and small businesses, the Republican blueprint would stop the Democrats’ largest tax hike in history, eliminate the Alternative Minimum Tax, and give taxpayers the option of paying a flat tax and filing their taxes on a single page.”

http://republicanleader.house.gov/News/DocumentSingle.aspx?DocumentID=93622

 

After taking a moment to give our people a mental clap on the back, frustration and to some extent despair reared it’s ugly head in my heart.

Our radical new plan, is in effect a watered down version of some of the platform issues that made Mike Huckabee so attractive to his supporters. The same Huckabee vision that was shot down by party elites as one that was not well thought out, or practically impossible to accomplish.

When I thought further of the tumultuous ride we have all been on in this econonomy and society in general these last crazy months of the political silly season, I found more and more examples of Huckabee’s foresight on issues that later came to be the talk of the day.

Let’s start with the economy. During one of the early debates, Huckabee was the only GOP candidate to answer a question about the state of the economy with a ‘non party line,’ but truthful answer. For the working class American, the economy was not doing very well at all; and he was right. Within a month of that debate, the sqeeze that the working class was feeling, had crept into the middle class sensibility, and the stock market was on the fritz. Now the struggling economy is “issue number one”.

On the war on terror, Huckabee wrote a comprehensive analysis of current strategy in the middle east, and proposed that we needed to be focusing more on Pakistan and holding them more accountable for helping us in the GWOT, given the amount of resources we are pouring into their coffers. He was ridiculed for suggesting that the Bush administration had a ‘bunker mentality’ to the war, and his position on Pakistan was laughed out of town. A few weeks later, Bhutto was assasinated, democracy took a few steps backward in Pakistan, and an environment of political unrest increased the chances that Pakistan would fall into the hands of the extremists in its midst. Who’s laughing now?

Anybody who ever watched a republican debate was sure to hear the mantra from Huckabee, ‘We need to be able to feed ourselves, fuel ourselves, and defend ourselves,” if we are to stay free.

He suggested, again to ridicule, that America needed to start exploring all options, alternative and fossil, to ensure our energy independence within ten years. He even went so far as to draw paralells with the pace of the progress that was made by Kennedy in the space race. He did not talk about long term planning, he talked about doing it NOW, and agressively. Now we are paying over four dollars a gallon for gas, and everybody wants to ‘Drill now” with the ultimate effect of possibly being energy independent within the decade.

Huckabee talked about the importance of being able to feed ourselves, and implementing policies that would insure that our food supply did not have to come from external sources. This may seem to be common sense, but he was the ONLY candidate, on either side of the isle to talk openly about food sustainability on the campaign trail. Now, the world is in the middle of a food crisis. Rice and flour are being rationed at Wal-Mart and Cost-Co. Food prices are going up in part because of poor policy implemented regarding biofuel mandates, and there are riots in the streets in developed and third world countries alike. why was Huckabee the only one with the vision to adress this critical subject as part of his policy platform?

Huckabee also talked about the danger inherant in outsourcing our self defense. Again, this was not part of ANY other candidates talking points on the stump. Along comes the scandal of the outsourcing of our fuel tanker pentagon contract to a European based company. Now ‘Outsourcing our defense’ is the latest buzzword on the talk circuit.

Huckabee was howled out of town for daring to suggest that our Tax system needs a massive overhaul. He was considered naieve for adopting a platform issue in the Fair Tax that ‘could never be passed.’ Well somebody needs to do something!! Tax reform MUST be on the agenda of one party or the other, and whoever latches on to it first will have a winning platform for years to come. It looks like the GOP is taking a step in the right direction with the disclosures in today’s statement.

Huckabee was the only GOP candidate to call the stimulus package the farce that it is, pointing out that it only stimulates the economies of the very countries with whom we have a terrible trade deficit imbalance. Many lauded, and some decried his suggestion that working on restoring our infrastructure would  stimulate our local economies, while providing jobs and strengthening the foundations that ensure our transportation veins remain open for commerce. The tragedy of the bridge collapse in Minneapolis. subsequently made the subject of our rotting infrastructure take center stage for weeks on end. Now many in congress on the left and the right are advocating for infrastructure development in their home states as a means of stimulating economic growth.

When all is said and done, time and time again, the wisdom and foresight that Huckabee has demonstrated in sensing what issues need to be highlighted and adressed is nothing short of astonishing. It shouldn’t be, he has governed for ten and a half years successfully, even if his detractors prefer the spin that he is a preacher on a political holiday.

It is high time that this man get some of the respect that he deserves for being a brilliant and visionary politician. If you’re going to adopt and implement his ideas, at least have the courage to admit that he’s not the ‘hick, knuckledragging, snake oil salesman, Huckabilly’ that so many of you, liberal and conservative alike, have deemed him to be.

America may never know the gem it lost by not having the courage to believe that somone so unorthodox, and yet so intimately connected with her heart, could make it all the way to the oval office. She may yet be lucky enough to benifit from his vision, if John McCain finds the courage in his heart to do the hard thing and offer him the veep spot.

I can only hope.