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Question 1 on the upcoming November ballot states: “Do you want to limit property taxes to one percent on the assessed value of the property?” Maine voters need to know the effects their simple vote of “yes” or “no” would have, said four economists at the University of Maine who have put together a report that offers an explanation of the tax cap.
Todd Gabe, Tom Allen and Jonathan Rubin of the Department of Resource Economics and Policy, along with Catherine Reilly of the Margaret Chase Smith Center for Public Policy composed an analysis of the effects of the proposed tax cap.
The Maine Revenue Services, the U.S. Census Bureau, the Maine Department of Education, the Maine Office of Fiscal and Program Review and the Maine Municipal Association provided the data to complete a 53-page summary of the effects that the proposed tax cap would have had on last year’s taxes.
While there were towns in which the tax rate would have gone down for its homeowners, the research showed that in a number of towns, tax rates would in fact rise due to changes in the values of the homes. Both Allen and Gabe expressed that this was an unexpected outcome.
“One of the biggest surprises that came out was the increases in property taxes,” Allen said in response to the results.
The circumstances under which taxes would increase center around the time at which the homeowner purchased their home. The report shows that recently purchased homes would be taxed higher than those that have been owned for years if the tax cap passes.
“The perception around the state is that this would lower everybody’s taxes, and that’s not the case,” Gabe said.
The fact that recently purchased homes will have increased tax rates leaves some to wonder exactly who the proposed tax cap would affect the most. The Maine Board of Education issued a statement in regards to the negative effects that would be put on Maine’s school funding.
“The cap will result in crippling cuts in school funds and stimulate state control of education. It will starve municipal treasuries with the inevitable result of significant cuts in fundamental local services such as police and fire protection,” according to a report issued at the board’s recent meeting at the University of Maine in Farmington.
However, pupils in kindergarten through grade 12 will not be the only students affected if the tax cap passes. The study shows that recently purchased homes will see a possible increase and college students looking to graduate and move into their own homes could be affected.
“There is a differential impact on homeowners. If you’re getting ready to graduate and find a house, you’re not going to benefit,” Gabe said.
One of the driving forces behind the economists’ research was to inform the voters both old and young of the risks and possible outcomes of Question 1. The 53-page report is available at www.umaine.edu/mcsc/ TaxCap.pdf.
“I would encourage any student to look at the study, to go out and vote in November [and to] just get in the habit of becoming informed on what you’re voting on,” Gabe said.
