- Associated Press - Thursday, April 9, 2015

AUGUSTA, Maine (AP) - Maine Democratic lawmakers released a counter-proposal to Republican Gov. Paul LePage’s budget and tax overhaul plan on Thursday they said would provide more relief to middle- and lower-income families while boosting funding for schools and municipalities.

LePage wants to slash corporate and individual income taxes to strengthen the state’s economy and encourage more people and businesses to move to Maine. But Democrats claim his budget primarily benefits the wealthy and would result in skyrocketing property taxes and cuts to education.

“We reject the governor’s failed top-down strategies that have bankrupted states across the country,” Democratic House Speaker Mark Eves said Thursday. “We believe the economy grows best when it grows from the middle out.”

Like LePage, Democrats want to transform the income tax code, but their plan is dramatically different.

They would provide an overall income tax cut of about $120 million as opposed to $490 million under the governor’s budget and maintain the current tax rate of 7.95 percent for those that make more than $150,000 a year.

LePage wants to lower the top rate to 5.75 percent by 2019 and double the amount of tax-exempt income to about $10,000, removing about 60,000 residents from the tax rolls.

Democrats would exempt the first $5,200 and lower the rates for people who make up to $150,000, but not to the same extent as LePage.

Democrats argue their plan would ensure that most of the tax relief is felt by middle-and low-income earners while LePage’s budget would create a $300 million revenue hole that would force education cuts in order to provide tax breaks to corporations and the rich.

LePage officials take issue with that claim and say the governor is working to help low-income families out of poverty, noting that he was homeless for a time as a child.

“He has spent a large amount of time in his governorship trying to reform government to improve the lives of people so they can climb the economic ladder,” said Brent Littlefield, LePage’s political adviser.

Democrats are also proposing to increase revenue sharing to $80 million annually, maintain the property tax exemption for nonprofits, boost the homestead exemption for all Maine homeowners to $20,000 and increase funding for K-12 schools by about $20 million. They would also keep the sales tax at 5.5 percent, instead of lifting it to 6.5 percent under LePage’s budget.

Their plan would be paid for by expanding the sales tax to include more services - which LePage had also proposed - maintaining the high tax rate on the wealthiest and keeping in place the estate and corporate income taxes. LePage wants to cut the corporate income tax from 8.93 percent to 6.75 percent by 2021.

Republicans criticized Democrats for not putting forward any ideas to reduce the size of state government and curtail spending - steps that the GOP says are critical to improving Maine’s economy.

“To that extent, the Democratic plan appears to be more tax and spend as usual with no real tax relief for Maine families,” said House Republican Leader Ken Fredette.

Despite their differences on many issues, Democrats have embraced many of LePage’s ideas, like increasing funding for a property tax credit program and providing a sales tax credit for low-income families. They say that shows they’re dedicated to coming to a budget that all sides can agree on.

“There is too much at stake for Democrats to simply stand on the sidelines and not offer a competing vision for how to grow our economy,” Eves said.

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Follow Alanna Durkin at http://www.twitter.com/aedurkin

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