An Act To Reduce Income Tax to 4.5% and Remove Low-income Families from Taxation
Be it enacted by the People of the State of Maine as follows:
Sec. 1. 5 MRSA §1518-A, as enacted by PL 2005, c. 2, Pt. A, §4 and affected by §14, is amended to read:
§ 1518-A. Tax Relief Fund for Maine Residents
1. Tax Relief Fund for Maine Residents. There is created the Tax Relief Fund for Maine Residents, referred to in this section as "the fund," which must be used to provide individual income tax relief to residents of the State. The fund consists of all resources transferred to the fund under this section and section 1536 and other resources made available to the fund.
2. Nonlapsing fund. Any unexpended balance in the Tax Relief Fund for Maine Residents may fund does not lapse but must be is carried forward to be used pursuant to subsection subsections 1 and 4.
3. Transfer from revenue growth. Beginning with fiscal year 2012-13, at the close of each fiscal year, the State Controller shall transfer to the fund any General Fund revenue received by the State for the fiscal year being closed that exceeds the amount of General Fund revenue received by the State for the previous fiscal year, adjusted by the growth limitation factor calculated under section 1534, subsection 2.
4. Income tax reduction. Amounts contained in the fund must be used to reduce individual income taxes. If on December 1st of any fiscal year the fund exceeds $1,000,000, the State Tax Assessor shall submit legislation to the Legislature by January 15th of that fiscal year to reduce the income tax burden pursuant to this section. The legislation must ensure that any amounts contained in the fund are used to:
A. Reduce individual income tax rates until a top rate of 4.5% is reached; and
B. Increase to $30,000 the income threshold below which heads of household and married couples filing jointly pay no state income tax.
SUMMARY
This bill requires the transfer to the Tax Relief Fund for Maine Residents, beginning in fiscal year 2012-13, of any growth in General Fund revenues over the previous fiscal year adjusted by the growth limitation factor. Money in the fund must be used to reduce the overall individual income tax burden by reducing the tax rates until the top rate is reduced to 4.5% and increasing to $30,000 the income threshold below which families do not pay income tax.