‘Sec. L-1. 36 MRSA §200, sub-§1, ¶A, as enacted by PL 1997, c. 744, §1, is amended to read:
A. Part 1 of the report must describe the overall incidence of all state, local and county taxes. The report must present information on the distribution of the tax burden:
(1) For the overall income distribution, using a measure of system-wide incidence that appropriately measures equality and inequality;
(2) By income classes, including, at a minimum, deciles of the income distribution; and
(3) By other appropriate taxpayer characteristics . ; and
(4) The report must include a calculation of the average effective tax rate on state and local taxes paid by the top 1% of tax families and the bottom 99% of tax families. For purposes of this paragraph, "average effective tax rate on state and local taxes paid" and "tax families" have the same meaning as section 5111-C, subsection 1.
Sec. L-2. 36 MRSA §5111-C is enacted to read:
§ 5111-C. Tax equalization assessment
1. Definitions. As used in this section, unless the context otherwise indicates, the following terms have the following meanings.
A. "Average effective tax rate on state and local taxes paid" means a fraction, based on statewide tax family data for the taxable year, the numerator of which is the sum of income tax liability, property taxes accrued on a homestead and sales taxes paid and the denominator of which is expanded income for the taxable year.
B. "Expanded income" means total income required to be reported on federal Form 1040 for the taxable year, plus tax exempt interest earned during the taxable year and, to the extent included in the calculation of federal total income, the absolute value of the amount of trade or business loss, net operating loss, capital loss, farm loss or partnership or S corporation loss.
C. "Homestead" means any residential property, including cooperative property, in this State assessed as real property owned by a tax family or held in a revocable living trust for a tax family and occupied as a permanent residence or owned by a cooperative housing corporation and occupied as a permanent residence by a tax family that is a qualifying shareholder. "Homestead" does not include any real property used solely for commercial purposes.
D. "Income tax liability" means the total amount of tax that a tax family estimates will be due for a taxable year under this Part, exclusive of a withholder's liability for taxes withheld, less any allowable credits for that taxable year. "Income tax liability" does not include the assessment under subsection 2.
E. "Individual effective tax rate on state and local taxes paid" means a fraction, the numerator of which is the sum, for the tax year, of a tax family's income tax paid to other jurisdictions, income tax liability, property taxes accrued on a tax family's homestead and sales taxes paid and the denominator of which is the tax family's expanded income for the tax.
F. "Permanent residence" means that place where a tax family has a true, fixed and permanent home and principal establishment to which a tax family, whenever absent, has the intention of returning. A tax family may have only one permanent residence at a time and, once a permanent residence is established, that residence is presumed to continue until circumstances indicate otherwise.
G. "Sales taxes paid" means state sales and use tax reported as an itemized deduction for federal income tax purposes or, if not included as an itemized deduction, the amount as calculated by the federal optional state sales tax tables.
H. "Tax equalization assessment" is an amount, which may not be less than zero, equal to the difference in the average effective tax rate on state and local taxes paid and a tax family's individual effective tax rate on state and local taxes paid multiplied by a tax family's expanded income.
I. "Tax family" or "tax families" means a grouping of individuals based on tax filing status.
2. Assessment. For tax years beginning on or after January 1, 2013, in addition to all other taxes contained in this Part, a tax family must pay a tax equalization assessment if, for the tax year, a tax family has the following:
A. An individual effective tax rate on state and local taxes paid that is less than the average effective tax rate on state and local taxes paid by the bottom 99% of tax families as calculated in section 200, subsection 1, paragraph A; and
B. An expanded income of $250,000 or more for a tax family filing as a single individual or a married person filing a separate return, $325,000 or more for a tax family filing as an unmarried individual or legally separated individual who qualifies as a head of household or $400,000 or more for a tax family filing as an individual filing a married joint return or a surviving spouse permitted to file a joint return.
3. Revenue. Beginning in 2015, by January 15th annually, the assessor shall determine the revenue generated by the assessment imposed pursuant to subsection 2 and the cost of the credit allowed pursuant to section 5219-II for the tax year before the immediately prior tax year. The difference between the revenue and the cost must be transferred to the Maine Budget Stabilization Fund established in Title 5, section 1532.’