Mainebiz

W W W. M A I N E B I Z . B I Z 31 M A R C H 2 0 , 2 0 1 7 F O C U S W E A LT H M A N A G E M E N T / R E T I R E M E N T high demand that can work anywhere. ey aren't going to want to work in a state paying that high of an income tax. at's a very big concern." David Erb, a principal and prac- tice group leader of BerryDunn's tax consulting and compliance group, is seeing the same trend. "For some people who were able to cope with 7% or higher in taxes on their business income, double digits really got their attention. For some I would call it a deal-breaker," he says. Cutting ties While the decision to cut ties with Maine can be diffi cult, many feel they have no choice, says attorney Brian Dench of Skelton, Taintor & Abbott who chairs the Auburn law fi rm's board of directors. As an example, he points to a retired couple from Maine who spend part of the year in Florida. ey recently decided to move their domicile to the Sunshine State for good, despite all the hassle that awaits them, after seeing their taxable income for 2017 rise to $250,000 based on Social Security, pensions and an increase in their net worth as a result of a recent inheritance. at puts their estimated tax bill at nearly $19,000. Contrary to common belief, giving up Maine residency is not as simple as getting a new driver's license or register- ing to vote in another state, or spending more time in a vacation condominium — it entails a complete separation from life in the Pine Tree State, down to switching one's doctor and dentist. "In order to make the change," says Dench, "you have to really make it. You can't just fake it. You have to disengage yourself from all of your signifi cant contacts in Maine and establish yourself elsewhere." He says the break is often painful. "I've had people sitting in my offi ce literally in tears at the thought of having to abandon their Maine residence," he notes. "It's a very emotional issue for a lot of my clients, people who may have lived here all their lives." Lest anyone try to outsmart the Maine Revenue Services by maintain- ing two residences, the agency aggres- sively pursues alleged tax evaders, forcing some to go to great lengths to prove they were not in Maine for more than 183 days of the tax year, by showing proof like electricity bills, airline tickets, calendars, diaries and credit card receipts. While non- residents are allowed to maintain a permanent abode in Maine, they must keep records to verify they spent more than half the year in another state, according to MRS guidelines. While the surcharge has raised the anger level for many top earners, several legal and fi nancial advisors say there's not much someone can do to cut their tax bill here short of leaving. One said people could buy municipal bonds, but there's a limited supply in Maine and the return is limited. ose that leave also take their tax dollars for education and other causes elsewhere, along with their charity allegiances. "When someone leaves we don't just lose the 3%, we lose the 7.15%," says Pierce Atwood's Block. "We don't get anything from them. It's going to take a lot more people pay- ing that surcharge to make up that entire amount that Maine is losing by driving people out. at only makes it harder to raise money for education." It's not just wealthy philanthropists being stung by the new surcharge. It also hurts couples in well-paid professions with a combined income of $200,000 and owners of small busi- nesses responsible for paying taxes on the company's profi t, as so-called pass-through entities, and who may not be able to move their business. is, in turn, could have a detrimental long-term impact on Maine's econ- omy, population and private-sector employment, the conservative Maine Heritage Policy Center and the state Offi ce of Policy and Management warn in separate reports. e OPM estimates a loss of up to $160 million in economic output in the fi rst year alone, and up to $320 mil- lion within three years, according to a letter presented to the Joint Standing Committee on Taxation in Augusta on March 8. At a microeconomic level, the Secure your future with confidence. 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A Division of Bangor Savings Bank C O N T I N U E D O N F O L L OW I N G PA G E » We are not opposed to increased funding for We are not opposed to increased funding for We are not opposed to increased funding for We are not opposed to increased funding for We are not opposed to increased funding for We are not opposed to increased funding for We are not opposed to increased funding for We are not opposed to increased funding for We are not opposed to increased funding for We are not opposed to increased funding for We are not opposed to increased funding for We are not opposed to increased funding for We are not opposed to increased funding for We are not opposed to increased funding for education ... Let's find another source that does education ... Let's find another source that does education ... Let's find another source that does education ... Let's find another source that does education ... Let's find another source that does education ... Let's find another source that does education ... Let's find another source that does education ... Let's find another source that does education ... Let's find another source that does education ... Let's find another source that does education ... Let's find another source that does education ... Let's find another source that does much less harm and helps us to grow. — Dana Connors Maine State Chamber of Commerce

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