2013 was a year of many changes to the U.S. tax code, and some of the most significant changes were targeted at raising taxes on high-income Americans. The fiscal cliff tax deal created a new 39.6 percent income tax...
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- Spurred by Tax Foundation Index Ranking, Maine Gov. Calls...
Spurred by Tax Foundation Index Ranking, Maine Gov. Calls for Corporate Tax Cut
Last Friday, Maine Governor Paul LePage cited Maine’s improvement in our State Business Tax Climate Index ranking in his call for further tax cuts to build on recent progress. Maine’s ranking improved 7 spots this year (from 37th to 30th) due to the elimination of its alternative minimum tax (AMT) in its individual income tax code and the restoration of net operating loss carry forwards in its corporate income tax code. Maine’s score will likely further improve next year as the top rate of its income tax is scheduled to fall from 8.5 percent and the number of brackets is scheduled to be reduced from four to two. Governor LePage on Friday called for additional reforms and repeal of the corporate tax, which could potentially produce far more dramatic improvement.
Maine’s corporate tax component ranking in the Index improved from 47th to 41st as a result of the temporary ban on net operating loss carry forwards expiring, once again allowing carry forwards up to the common 20 year limit. NOL carry-forwards allow businesses to apply losses in one year to reduce tax liability in future years such that taxes apply to a firm’s average profits. This provides for more neutral tax treatment between industries with more or less volatility of profits over time. However, Maine still does not allow carry backs that would allow businesses to apply current losses to reduce positive tax liability in previous years.
Maine’s individual income tax ranking improved from 30th to 27th as a result of the recent repeal of the alternative minimum tax (AMT) that required many individuals and businesses filing as individuals to calculate two separate state tax returns. Repealing the AMT has greatly simplified and reduced the cost of tax compliance on the individual side. However, Maine retains an AMT on the corporate side.
More on Maine here.
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