No Income Taxes in Maine? Seriously?

Expecting something from your government for nothing is a bad idea.

Illusion as a Political Art Form

Recently, propped up by public announcements from Maine’s Republican Governor Paul Lepage, The Maine Heritage Policy Center (the leading “free-market” think-tank in Maine) has announced that it will be rolling out a “solid plan” to arrive at “Zero Income Taxes” in Maine. This is not only a misguided idea, it avoids addressing some uncomfortable economic realities.

As costs rise, income taxes are an increasing burden. Reducing government expenses with care is important, but so is maintaining revenues to provide essential services.

By reducing revenues derived from state income taxes to the level that existed in 1994 (as they propose) there would be a gigantic gain in the pockets of many Maine citizens, yet the savings to particular individuals would depend upon where they fall on the income curve.

More importantly, this suggestion ignores another essential reality: the costs associated with government services would not revert to what they were 18 years ago absent divine intervention.

The result, unfortunately, would be the impossibility of delivering those services without dramatic increases in some other income flow. Folks forget that states without an income tax have either another source of revenue to sustain government service or have substandard services.

You can’t have it both ways.

Only seven states (not nine, as they claim) have no income tax. Tennessee and New Hampshire both tax interest and dividend income. Additionally, Texas and New Hampshire make up the shortfall by having some of the highest real property taxes the nation. Alaska reaps it’s revenues from one source: the oil business. Nevada has gambling. It’s a simplistic view that holds that folks who live in states without income taxes pay less overall to fund their state government absent a sugar-daddy. Would we, for example, invoke a “View Tax” on Maine property owners as they do in New Hampshire, or Texas’ “MUD” tax?

Already strained by cuts in funding, without income tax revenues or some new source of funds, Maine’s ability to allocate money to infrastructure maintenance and repair, education, essential health services, public safety, administrative and judicial services and environmental and recreational resources would collapse.

So exactly where are the dollars necessary to balance Maine’s budget going to come from assuming providers of goods and services to the government aren’t going to agree to drop their pricing to 1994 levels?

I look forward to reviewing The Maine Heritage Policy Center’s proposal.

History in a Closet

 

Somewhere is Augusta, Maine, a modern masterpiece has been hidden in disgrace by Maine’s Republican Governor, Paul LePage. The story of the Taylor Murals is worth telling at a time when a battle rages between the power of business and the dignity of labor.

Governor LePage was adamant from the outset that our state must become more “business friendly.” And, in a sense, he’s right. Vibrant business is a vital component of any economy. But in his zeal, he’s forgotten something.

The Taylor murals depict the history of the labor movement in Maine and were commissioned as a work of public art to be displayed for the benefit of the people of Maine.

Shortly after assuming office as Governor in 2011, Paul LePage announced that he had received an anonymous email complaining that artist Judy Taylor’s mural (which had been installed in the lobby of the Department of Labor in our capitol city) wasn’t business friendly and ordered the work removed.

In the ensuing year great controversy arose, protests took place, the national media took note and lawsuits flew in all directions.

The Governor stood firm by his decision, refusing even to divulge the whereabouts of this testament to the struggle of Maine workers and the legendary figures of Maine politics whose images adorned the work.

My suspicion has always been that a mural depicting life in the mills of Lewiston/Auburn caused the Governor intense personal pain. Growing up as the son of an abusive mill worker in Lewiston, Maine undoubtedly colored his perceptions, yet the fact that the shoe workers’ strike of 1937 (a major image within the work) was supported by 5,000 out of 6,000 workers certainly establishes it as a significant historical event in the story of labor in Maine.

Today I read that a replica of our Labor Mural will be touring in other states and that gave me some pride as a Mainer, yet I’m saddened that the original has been shuffled away to some dark closet in Augusta by the flippant order of a single man.

Judy Taylor’s work graphically illustrates not only the experience of those shoe mill workers, but of shipbuilders, woodsmen, paper mill workers, craftsmen and artisans, the casting of the first anonymous ballot in Maine and many famous faces of Maine Labor including our revered Francis Perkins (U.S. Secretary of Labor and the first woman ever appointed to a U.S. Cabinet position).

Yet behind this small story there is another, more important lesson.

We seem to have lost our way in the understanding of the importance of American labor to the American economic recovery. American union workers, especially public sector workers, have become the scapegoats of the Republican Party.

For me, the Taylor mural represents an essential economic and social truth that has escaped the Governor and his pundit supporters. While owners with their capital may be the captains of business, workers are the engine that provides the steam to make it run. Being worker hostile is not business friendly.

I hope you’re faring well, dear Maine Labor Mural. Perhaps the next time you see the light of day it will be in a more “people friendly” environment where you can tell your story with the dignity it deserves.

Perhaps the grand new lobby of the Portland International Jetport would suit you better.

Self Interest: There’s a Donkaphant In The Room

America is tired of the side-show. Here are some truths:

Any institution that values its own interests above the interests of the population it serves is bad.

A governmental agency devoted to generating work for its employees is bad

A business devoted more to making profits for its owners than to providing quality goods and responsibly valuable services to its consuming public is bad.

The real question is not whether big business is bad or big government is bad. Neither is intrinsically evil. The more important question is: How does a society protect against the irresponsibility of both while assuring prosperity for all?

For as long as this nation has existed, a strong but mostly rational debate on the topic has raged. There has been an ebb and flow of sentiment and shifting legislation from national and state legislatures trying to find balance.

These days, however, howling voices of condemnation in our legislative halls seem to have missed the point on both fronts yet managed to polarize the American public and effectively shut down our way of life. Balance, it seems, is no longer the objective.

Some pontificate about government announcing indignantly that what we have is not what the Founding Fathers really intended (as if they knew). Others proclaim with rigid indignation that capitalism is somehow a draconian system designed by sadists who enjoy enslaving the cowering masses of workers (and they do it with a straight face). The victim of this disingenuous argument has been the most successful economy the world has ever seen and the very people who made it work: you and me.

I have my own theories about how this all got started, but they’re my theories and the genesis of the problem isn’t the problem. Pointing fingers at the past won’t move America productively into the future, but each group of representatives is so entrenched in it’s own paranoia that discussion is impossible. Forget about finding consensus, the order of the day is to find the devil in every detail the other side proposes.

Barack Obama is an interesting character. He entered the White House like a homeowner returning to New Orleans after Katrina. There was quite a mess to clean up. He’s spent the past several years trying to make it liveable again with some success, but not enough to please either side.

This Thursday he tried again, admirably, to get the conversation back to a productive middle and away from the edges of what can be reasonably expected in such a backbiting political environment. The Left is angry. The Right is angry. They volley and thunder. But where does it get us as a nation?

The American economy is a business trying to get started again. So give it a chance. Stop sitting on the leader who was elected to get things done and just give it chance. It may be instructive, at this point, to consider that more business start-ups fail because of indecision than bad decisions.

What the Donkaphants don’t consider is that their profound self-interest is squeezing us all out of the room and we’re the ones who bought their tickets to their circus.

Shorting America

Three weeks from today, one of two things will have happened and either way a few people will make a hell of a lot of money and score some huge political point.

As the political pundits, serious journalists and the general population speculate on whether the United States Congress will authorize an increase to the Federal debt limit (a necessary and normally simple process), there are wagers being made by the few who understand financial and political reality and aren’t ashamed to take advantage of that knowledge at the expense of the rest of us.

The same people who grabbed windfall profits betting against markets a few years ago (and were richly rewarded both by governments and market recoveries) are shorting” America and perhaps the entire global economic structure.

There is not a single rational economic argument to be advanced in favor of permitting the United States to default on it’s debt obligations. None, unless blind greed or political nihilism is your objective.

Yet someone like Eric Cantor, with a straight face, is trying to do just that because he understands the political reality of the position he’s secured for himself in American politics.

Cantor is not stupid. He attended the prestigious preparatory Collegiate School in Richmond, received his B.A. from Georgetown University and followed that up with a J.D. from William & Mary Law School backstopped by a Master of Science from Columbia. He’s a well-educated man, but more importantly, he’s crafty.

Cantor has emerged as the leading voice for the continued support of the G.O.P. within a community defined by reactionary self-interest and the dismantling of governmental programs (local, state and federal) which provide for the general well-being of all U.S. inhabitants. He employs super-patriotic slogans and defines words like “citizenship” and “constitutional” with a tortured appeal to what I find to be a really distasteful elitism.

I suspect that his motivation in all of this is not only to secure his continued re-election in Virginia’s strongly conservative 7th district (where he’s trounced every opposition candidate since 2000); but worse, because he knows that it means prosperity pocketbooks of those who’s financial success depends upon his continued quest, and perhaps his own.

In the process, Mr. Cantor’s personal gaming hasn’t gone without notice. His wife, Diana Cantor (a lawyer and C.P.A.) is the Managing Director of the Virginia branch of Emigrant Bank’s wealth-management division, called Virginia Private Bank & Trust, which targets an ultra-rich clientele. Eric, meanwhile, has been Washington’s strongest supporter of the Republican stonewalling of tax code revisions that would require income earned by hedge fund managers to be taxed at normal marginal rates (like the rest of us) rather than the current flat 15% rate.  This single, largely unknown hiccup in the Internal Revenue Code steals billions (yes, billions) of dollars every year from the U.S. Treasury. It’s currently a perfectly legal wealth management tool. And it’s perfectly indefensible.

Should reasonable voices fail in stemming the tide of this Quixotic mission, you can bet that Eric Cantor and those like Paul Ryan who subscribe to it will not suffer. Neither at the polling place nor in their portfolios.
Shorting America, it appears, is a reliable way for some to hedge their bets.

The Art of Political Dragon Slaying

The “U.S. Deficit” is the most demonic term in the Republican vocabulary. Oddly, it was the Republican economic strategy that encouraged its growth. Why, then, would they create the very beast they decry?

Saint George: The Dragon Slayer

The freewheeling days of the Roaring Twenties came to an abrupt end because of business and capital market excesses. While it was fun for a few, it cast the United States into economic, political and social chaos. Then two things happened: The New Deal and the Second World War.

The first infused the country with jobs, wages, improvements to infrastructure, governmental regulation and programs to insure individual security. The second created the most powerful industrial complex in the world and assured the flow of a river of money from the government to private enterprise. A great irony is that the horror of the Great Depression and the horror of War combined to bring the United States economy and the well being of its citizens back to life.

The process, by necessity, generated massive debt. In 1945, according to the Congressional Budget Office, Franklin Roosevelt faced a national debt that was a crushing 117% of the Gross Domestic Product (GDP). Government spending without corresponding revenues does that; however, that crisis was addressed steadily over the following thirty years with taxes (as high as 50%) on swelling income flows that allowed most of the debt to be retired. It was vast government spending coupled with increased taxation that fixed the problems created by unbridled greed and an unavoidable war.

When Ronald Reagan took office in 1981 the national debt had been reduced to a respectable 32.5% of GDP. Yet the leaders and financial backers of the Republican Party had for two generations been longing for the good old days. They were prepared to begin their quest for the return of a pre-Depression free-market environment. The first order of business was freeing up money by cutting taxes. To sell the idea they asserted that government was a problem and that to grow the economy, taxes and government spending must be slashed. While revenues would suffer, they argued, the bulk of those lost tax dollars (retained by the wealthy) would “trickle down” to the middle and lower classes by creating jobs and stimulating economic growth.

At the same time, a full assault was launched on unions, governmental regulation and restrictions that kept American businesses from entering global markets. Money became a tool to solidify corporate power. It could be shifted away from the U.S. economy freeing it from government restrictions. Factories and jobs could be relocated abroad, thereby reducing domestic labor costs and eroding union strength. Unfortunately, the plan also had the effect of halting the steady rise of America’s median income, which stagnated as wealth moved upward and tax revenues fell.

This curious plan had one inevitable result. It reinvigorated the growth of our national debt. By the time Reagan left office, the national debt had exploded to 53.1% of GDP. It rose to 61.1% of GDP during the presidency of the first George Bush but fell to 56.4% of GDP during the Clinton administration. In fact, when Bill Clinton left the White House, the Congressional Budget Office predicted that during the ensuing 10 years the nation would generate a five trillion dollar surplus. It was a huge Democratic victory.

Unfortunately, the Democrats made a fatal error. They allowed the financial houses, banks and insurance companies, after years of lobbying, to re-write the laws controlling their own collaborations, mergers and growth. Federal regulations were discarded or ineffectively enforced. When George W. Bush took office, the scene was set for a perfect economic storm.

The winds began to blow with a series of tax cuts and code revisions that reinvigorated the flow of money away from mainstream America into the hands of wealthy individuals and corporate giants. Waves mounted when a national tragedy (the attacks of September 11) primed the administration for launching military engagements that were funded by debt not revenues. The storm broke the moment gigantic financial and insurance institutions, having had their way with shabby manipulations, suddenly imploded requiring unprecedented government expenditures to prevent domestic if not global chaos. The national debt soared to 83.4% of GDP as George W. Bush left office. The Congressional Budget Office predicted a ten-year loss of 4.7 trillion dollars in place of any gain.

Today, the outcry against the national debt is deafening but the Republican Party has seized upon it, embracing it as a rallying cry. It has become a chant in their political liturgy. But why? It was precisely their economic policies that nurtured its resurgence.

The answer is because the new mantra works to accomplish their second goal: dismantling what remains of the New Deal.

If consolidating wealth at the upper levels of the economic hierarchy is mission critical, then increasing taxes is counter-productive. Advocating a radical reduction in spending is the only alternative. Since the two largest segments of government spending are military expenditures and social welfare expenses, the choice is clear and the next step is certain. By harkening to deeply seated post-World War II fears of communism and the need for military might, the defense budget cash cow is secured and the portrait of the dragon is complete. Its face is the Democratic New Deal.

The GOP and its backers have armed themselves with a mighty sword. Our children and our future must be protected. Republicans are self-styled dragon slayers and their victory will be won by cutting out the dragon’s guts: Medicare, Social Security, social welfare programs, regulatory agencies, public education and workers’ rights.

Apparently, the second President Bush is no villain: He’s Saint George.

Lunch at JJ’s

The true joys of Maine are hidden in the air. Invisibly, they surround us like a phantoms awaiting discovery.

Maine is a rare present, hiding it’s best delights from view. And while the images of her rugged northern coast, her sprawling southern beaches, her majestic lakes, rivers and forests draw tourists in droves, there are, for me, more stunning pleasures.

Today is a typical dreary, chilly day in that others call spring. Here, the coming of summer is heralded by mud, mostly. Yet the harbingers of summer are all around and they delight me as I walk through Old Orchard Beach – an ancient amusement town devoted to wretched excess and worldly pleasures four months of the year.

Excess is sometimes excusable.

A freight train rumbles slowly through the heart of town on brilliant steel rails that separate the beach from the business district. Cars are unceremoniously halted by the pier as if to invite their passengers to pause and admire the carousel being polished to a bright sheen and lubricated for the coming droves of children questing for golden rings. The sounds of the box cars’ clattering wheels blend with the calliope’s perky tunes and transport me back to my childhood.

Familiar smells swirl with the light breeze, alternating between clams and potatoes frying in deep fragrant oil and mud flats at low tide. A few brave souls (perhaps devoted is more accurate) wonder along Grand Avenue having come for a prelude to the magic that will soon arrive.

Their conversations mingle, a blend of languages and dialects which is, to me, not foreign but friendly. I remember my grandfather bringing me here in a now dim past and being wildly excited that the people were all so different and so happy.

There are no ties here. No pants with whales embroidered on them. Women dress to inspire and the men oblige them. Folks with airs about them are seldom seen. Laughter is a required accessory.

I imagine the coming season and the bustling chaos it will bring as I finish my chowder at JJ’s, a small tavern/lunch bar snuggled up next to the tracks. The last boxcar glides past my table. A large gull who’s been watching me eat is perched fearlessly on the low stone wall that separating us from the relentless vibrations of unimaginable torque and the strangely sweet smell of an awe inspiring diesel locomotive. When the coast is clear, with a piercing screech he spreads his powerful wings and lifts himself silently into the air. That silence is deafening.

And in that moment, I understand why this place is one of those great joys that I’ve treasured for so long.

P.S. – JJ’s has great chowdah

The Strangest Dream

It’s approaching 5:00 a.m. on a chilly spring morning and I’ve been thrust from a cozy bed to tell you about this dream:

I was swept through a rag-tag commune by a fierce wind blowing me betwixt people in

Old North Church, Boston, MA

colorful costumes. It was a Woodstock-like world of swirling fabric tents and pounded earthen floors where women and children crowded around artisans weaving intricate shawls and brewing wonderful teas and beer.

They spoke of poets and of ideas as diverse as the clothing they wore and each had a different story to tell. None shared the same message but each had an audience and received applause and good cheer as they recited their visions and hopes for tomorrow.

My hair was blond and longer in my dream, as it hasn’t been for years, and flowed with the wind that rushed me through small shops while my scarf of crimson, white and midnight blue entwined around the waists of women and the shoulders of men I’d known as enemies and bound me, briefly, to them until we smiled. As though the instant in which we’d let go of our anger released me to move on.

In the end, I paused to admire the goods upon a table made of pine boughs and topped by a sea-worn piece of schist with veins that flowed like waves glittering with bits of micas, like stars trapped in time. I recognized the vendor as a teacher I’d had long ago and asked, “May I buy these?”

She smiled, “No … they already belong to you. Just take what you fancy, but leave the rest for others.”

Throwing back the comforter, I stumbled out of bed and went to my deck to look out across the waters of the bay and sort through the illusions. From the distant shore, a single beacon from the Wood Island Light blinked once.

In that instant, I recognized the tapestry of the dream and its metaphor.

On a morning just like this hundreds of years now past, in the dim light of a chilly April dawn, the dream of engaging dispirit and desperate citizens in a common cause to forge a new community was born.

A silversmith rode swiftly through the countryside to awaken farmers and merchants and scholars and craftsmen to set aside their differences and join in a common cause.

Now, as the first rays of this new dawn illuminate the waters of the Gulf of Maine, I understand more than I knew when I retired last night and long for the dream to return.

Still The Way Life Should Be

A small lobster boat drifts along on the shores of Saco Bay this morning, the small crew searching to find that which they thought they’d lost in a freak storm.

Maine is, by area, the 39th largest of the United States and 38th by density, yet it doesn’t have a single city that even shows up in a list of the top 300 U.S. cities by population. Mainers like to think of themselves as different in their attitudes about most things. Not so quick to hop on the bandwagon for things “new” and more careful about throwing out stuff considered by others “old-fashioned.” Perhaps it’s in the blood, but I fancy it’s in the air because it’s a trait caught quite easily by folks who come here from where we call “Away” looking for a place that’s more emotionally sustaining in their lives … searching to find a life the way it SHOULD be.

Michael Townsend and his daughter, Lily, in 1998

That slogan,”The Way Life Should Be,” was used by the Maine Office of Tourism in an ad campaign conceived by a former New York ad man named Michael Townsend some years ago. The story of its genesis isn’t unique, but Michael tells it well. A sign bearing his words still welcomes all who cross the Piscatauqua River from New Hampshire at our southern border.

Maine has just weathered another of our famous “Nor’easters” and the crew of the Salty Bay is scouring the waters for lobster traps (called “pots” here) torn up from the ocean floor by massive waves. Similarly, the people of Maine are scouring the wreckage from an economic storm recently past and doggedly putting back the pieces of their lives.

The lobstermen of the Salty Bay will find some of their pots and reuse them. Others they find will belong to different boats and will be returned to their owners. In Maine, poaching someone else’s lobster pot is an unofficial capital offense. What is no longer suitable for its purpose will be discarded unless a new use for it can be devised: perhaps a few dollars from a tourist who visits this summer looking for a keepsake.

Mainers are a resourceful lot. Neither this week’s Nor’easter nor the storm of our recent economic past have ruined our coastline or our spirit. And while there is certainly much cleaning up to do, we will sort through our frustrations with all the cantankerous grumbling that defines a family squabble and return to where we began.

Maine: Still The Way Life Should Be.

[N.B. The above photograph has been used without the formal the consent of copyright holder or the approval of Michael or Lily Townsend, which have been requested. Michael is presently the Director of Creative Services for the public relations firm of Perry & Banks in Portland, ME, having believed his own copy and relocated here with his family from New Jersey.]

The Chorus is Sounding a Bit Sour

I love Maine, and in an odd way, I am grateful that Paul LePage is who he is and that, for a time, he has served as it’s Governor.

Maine Governor Paul LePage

LePage has, with no hesitation, illuminated some very basic questions about who and what the people and the State of Maine are. They are questions that have lingered in my mind for many years behind our appearance of tranquility, concern and calm independent thought.

We’ve told the country for years that we represent the Way Life Should Be. Like every other state, we have struggled for generations with the normal problems of any society: faltering economies, the dilemma of preserving natural resources in the face of needed development, and the challenge of incorporating increasingly diverse populations into the proud and coherent mix we call Americans. Through it all, we’ve proclaimed that “We Lead the Way.”

Crushed by the same unexpected disaster as the rest of the nation (and the world), unimagined anger exploded from the core of our collective political conscience. Everyone had a finger to point, usually at whoever happened to be in an elected office, but too often at whoever looked different, thought differently or lived differently than they did.

Governor LePage was elected by a “minority landslide,” a fluke of the plurality voting mechanism we employ in our state. Nevertheless, he was a perfect choice to sound the voice of collective anger. And he has.

In three short months, he has led Maine to the front of the national stage in a role we never wanted to play. Rather than displaying the leadership, prudence and compassion of political icons like Republican Margaret Chase Smith and Democrat Edmund Muskie, the character of Paul LePage has cast us in the role of the schoolyard bully. Today, even his supporting Republican chorus has realized that the melody they’ve been singing is a bit sour and the lyrics are colored with fear and disdain. Tomorrow, we’re told by the Portland Press Herald, nearly half of Maine’s Republican Senators will release a public statement criticizing the manner in which Governor LePage has led the way for Maine.

The play, of course, will continue, but Governor LePage’s current vacation has given Mainers a chance to pause, to look back on the past several months and consider whether his version really portrays their vision of The Way Life Should Be.

A New Dance in Maine

There’s a dance sensation that’s sweeping the nation: The Republican Stomp!

Starting in Wisconsin, the craze caught on in Florida, Ohio, Iowa and finally, it’s the all the rage right here in Maine. Notwithstanding our state motto, Dirigo (I lead), our governor, Paul LePage, was late to the dance and needed to scope out the room before hitting the floor to show off his stuff.

Wisconsin’s Scott Walker had no such hesitation, he grabbed a union gal and promptly slammed her to the floor prompting observers to wonder whether he understood that she had a lot of friends who might not stand for his “my way or the highway” choreography.

Terry Branstad of Iowa followed soon after and Rick Scott of Florida and John Kasich of Ohio were soon throwing workers rights and union contracts about in something resembling a drunken Lindy.

Now, well into the chorus of this foot-tapping swing number, Paul LePage (after having gained a reputation for himself by telling the principal to “Kiss my ass,”) has strode onto the national dance floor with a swagger that puts John Travolta to shame.

After assuring and reassuring the workers of Maine that his political goals were not anti-union, he announced that the murals at the Maine Department of Labor (commissioned by the State only 3 years ago to celebrate Maine’s history of labor achievements and honor its icons) were to be summarily dispatched. In a brilliant hammerlock flip move, he explained that the reason for his decision was because the role of the Maine Department of Labor was now to be “Business Friendly!”

This sort of politics isn’t dancing. It’s mayhem. Rather than the give and take that advances the goal of compromising divergent interests to achieve common good, the new Republican Stomp establishes politics as a martial arts event.

In the 1890’s, Charles K. Harris’ “After the Ball” became America’s first platinum hit. The lyrics describe how arrogance and jealousy on the dance floor can lead to the destruction of relationships and bitter regret.

After the ball is over, after the break of morn,
After the dancers’ leaving, after the stars are gone,
Many a heart is aching, if you could read them all—
Many the hopes that have vanished after the ball.

No one benefits from autocratic decision-making or dance floor bullying. Paul LePage needs to be reminded that Dirigo means “I guide” not “I push you around.”