Mainebiz

W W W. M A I N E B I Z . B I Z 11 JA N UA R Y 8 , 2 0 1 8 2. What effect could tax reform have on the economy? DeLutio: Our federal and state tax systems would both benefi t from serious, comprehensive reform. Good reform would simplify the system so businesses and individuals can devote more resources to production rather than compliance and tax dodging. Good reform would improve our fi scal position by reducing defi cits and unfunded liabilities, both of which hurt long- term growth; it would address both taxes and spend- ing. Good reform would remove market-distorting loopholes and policies to encourage investment equally in both physical and human capital. And, just to be perfectly clear, tax cuts and tax increases alone are not the same as tax reform. Damicis: e short-term eff ect will include an uptick in investment and even wages as the economy responds to the tax reform as a stimulus. is will be in addition to a certain level of a taking of profi ts by corporations from a portion of the economic gains. Mid-to- long-term, the tax reform will have a drag on economic growth as the defi cit increases and signifi cant cuts kick-in to programs that support infrastructure, health-care and workforce creating a further erosion of the middle class and increasing economic disparity. Iris: e impact of tax reform on the economy is multi- faceted and nuanced. e current administration's pro- business emphasis may support growth from a supply- side perspective, which can ultimately fuel growth if tax savings are productively reinvested in capital spend- ing and wage growth — key factors that are yet to be determined by business owners and leaders. Rector: Nationally, there is the potential for increased economic activity in 2018. Early indications are that corporations will see a sizeable benefi t, which could motivate some of Maine's many pass-through busi- nesses to convert to C-corps, although pass-throughs themselves will see some additional tax benefi ts. Many individuals who have previously itemized will likely take the now-higher standard deduction instead. While Gov. Paul LePage has made considerable reductions to the income tax rates, Maine's top rate remains above the national average and so there may be some high-income taxpayers who might consider relocating if Maine doesn't continue to reduce taxes. Bouvier: e administration claims that the corporate tax cut will stimulate the economy, through "trickle down" economics. at assumption is not borne out by past experience. Moreover, while the cuts to the taxes paid by corporations are permanent, the tax cuts to individuals will expire. Ultimately, the package exacer- bates inequality and increases the federal defi cit. 3. What impact could any new state legislation have on businesses? DeLutio: e Pine Tree Development Zone program will expire at the end of 2018 unless the Legislature renews it. is is one of the state's core business incen- tive programs and a recent report called for modifying certain aspects of its design. How the Legislature han- dles that will aff ect future business development. e Legislature must also address the Medicaid expan- sion approved by voters in November. is outcome is particularly important for some rural hospitals that depend heavily on Medicaid reimbursements and are the largest employers in their communities. Similarly, the marijuana industry awaits the legalization that was approved by voters in 2016. Other potential issues include solar power regulation, broadband investment and changing the process for citizen-led referenda. Damicis: e biggest legislative impacts in the coming year will not be on new programs, regu- lations and services but how Maine handles its C O N T I N U E D O N F O L L OW I N G PA G E » Our biggest opportunity is turning some of the millions of people Our biggest opportunity is turning some of the millions of people Our biggest opportunity is turning some of the millions of people Our biggest opportunity is turning some of the millions of people Our biggest opportunity is turning some of the millions of people Our biggest opportunity is turning some of the millions of people Our biggest opportunity is turning some of the millions of people Our biggest opportunity is turning some of the millions of people Our biggest opportunity is turning some of the millions of people Our biggest opportunity is turning some of the millions of people Our biggest opportunity is turning some of the millions of people Our biggest opportunity is turning some of the millions of people Our biggest opportunity is turning some of the millions of people Our biggest opportunity is turning some of the millions of people who visit Maine each year into residents and lifelong consumers who visit Maine each year into residents and lifelong consumers who visit Maine each year into residents and lifelong consumers who visit Maine each year into residents and lifelong consumers who visit Maine each year into residents and lifelong consumers who visit Maine each year into residents and lifelong consumers who visit Maine each year into residents and lifelong consumers who visit Maine each year into residents and lifelong consumers who visit Maine each year into residents and lifelong consumers who visit Maine each year into residents and lifelong consumers who visit Maine each year into residents and lifelong consumers who visit Maine each year into residents and lifelong consumers who visit Maine each year into residents and lifelong consumers of Maine products. Every out-of-state visitor is like someone stepping into our showroom. — Catherine Reilly deLutio

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