- Associated Press - Tuesday, April 7, 2015

AUGUSTA, Maine (AP) - Republicans and Democrats on a legislative committee said Tuesday that they agree the state should maintain revenue sharing and throw out Gov. Paul LePage’s plan to tax nonprofits. But the two parties are divided over a variety of other pieces of the governor’s ambitious tax overhaul plan.

The Taxation Committee outlined their recommendations after weeks of negotiations on the governor’s more than $6 billion budget plan.

Republicans on the committee support LePage’s proposal to raise the sales tax to 6.5 percent to help pay for a dramatic income tax cut. They’re seeking to make tweaks to the governor’s income tax proposal, but support the overall goal of lowering the top income tax rate from 7.95 percent to 5.75 percent by 2019.

Republican Rep. Stedman Seavey of Kennebunkport acknowledged that supporting an increase in the sales tax is difficult. But Republicans say lowering the income tax rate will outweigh the impact residents will feel from a higher sales tax.

Democrats agree with Republicans on increasing the number of lower-income people who wouldn’t have to pay the individual income tax. But Democrats want to keep the general sales tax at 5.5 percent and craft a tax plan that provides roughly the same dollar amount of tax relief to all income groups.

Democrats contend that LePage’s budget is designed to primarily help the wealthy, noting that those who make about $400,000 would get a tax cut of more than $10,000 in 2019 while those who make $40,000 would get a $145 tax cut.

The Appropriations Committee will now work on the proposal before sending a budget bill to the full House and Senate. A budget must be in place by June 30.

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