Below is the text of Representative Flaherty’s remarks to the Scarborough Kiwanis Club:

Good Afternoon.  First of all, I want to thank you all for having me here today.  I know what important work that Kiwanas does here in Scarborough for the kids of our town, and I’m very proud to have this opportunity to speak to you today and I hope that I may be able to answer some of your questions and address concerns that you have.

I want to take a few moments to talk about an issue that has been in the news all year long.  It was an policy that I strongly supported, and continue to support, and will defend between now and November.  Of course what I am talking about, is the comprehensive tax reform policy.

Now, the opponents are calling it a tax shift.  And they are right.  That is exactly what it is.  We are shifting part of the tax burden from working Mainers, to our out of state visitors.

After years of work and many failed attempts, this legislature passed the first comprehensive overhaul to the State’s tax code in more than 40 years.  Even the Wall Street Journal hailed the achievement as the “Maine Miracle,” as they agree that the new tax plan is designed to spur economic development, stabilize state revenues, and provide much needed direct tax relief. The plan has been enthusiastically supported by all of Maine’s major newspapers, Maine’s chapter AARP, Maine Municipal Association, and by chambers of commerce and business leaders across the state.  Locally, the Scarborough Economic Development Corporation endorsed the plan and brought people to Augusta to testify in favor of the bill.

But as you know, there are some groups that are trying to put the question to a peoples’ referendum.  I believe this is a mistake.   If they are successful in getting the tax reform question on the ballot, I hope that the people of this state will recognize that saying NO to a repeal of this long overdue reform is what is best for our state and best for our wallets.

Can Maine afford to say NO at this time to another $57 million a year in our pockets? Can Maine afford to delay making positive changes to our business climate that are needed to put us in the best position possible for economic recovery? Can we afford to turn our back on great press, like the Wall Street Journal, by putting our business community in a state of uncertainty for another year?

Well, I say NO.

But unfortunately, tax reform is a complicated subject that does not lend itself to sound-bites and, the subject can be easily manipulated with misleading or inaccurate information.  It took me plenty of time and lots of studying just to get caught up on the matter.  So what I want to provide you with is a few Myths and Truths about the tax reform policy that I support.

First, there is a MYTH that Tax reform will not help low and middle income persons.
The TRUTH is, Tax reform directly benefits these populations. Low and middle income Mainers will see their OVERALL tax burden, including both sales and income taxes, drop by over 18%.   To put this into context, 18% lower would be like having the choice between a new car at the price of $30,000 and a dealership directly across the street selling the same exact car for less than $25,000.   I know which dealership that I would buy from, and I could certainly use that extra $5,000 dollars.

A second MYTH out there is that Taxpayers will be hurt by tax reform’s elimination of personal exemptions and deductions.
But the TRUTH is Tax reform does eliminate exemptions and deduction, but replaces them with a smarter, easier, and more simple system that provides similar benefits using tax credits. As a result, over 95% of Maine taxpayers will see LOWER income taxes.

One MYTH suggests that Any savings in income taxes will be offset by increases in sales taxes.
But the TRUTH is the NET impact of tax reform is to lower the tax burden on Maine residents by over $57 million a year. Income taxes will be reduced far enough so that the vast majority of Mainers will have extra money in their pockets AFTER any expanded sales taxes are paid.

Another MYTH is that Tax reform is based on uncertain economic projections, and the numbers can’t be trusted.
Well, the TRUTH is, When Maine Revenues Services  analyzes possible changes to the income tax system, the computer model they use contains every Mainer’s individual income tax return; so the results are not hypothetical estimates based on broad assumptions, but actual numbers of how a proposal would affect each individual taxpayer. Estimates of sales tax impacts are not quite so precise, but they are based on solid data of what Mainers of different income levels pay for various goods and services. With this level of detail, we can say with near certainty how Maine taxpayers will benefit.

My favorite MYTH is that somehow, Tax reform will scare away visitors by increasing the meals and lodging tax.
But the TRUTH is, After the increase, Maine’s meals and lodging tax will still be far below most destination locations and the New England average. And there is no evidence that increasing this tax will reduce visitors. One example: Vermont, saw no impact when it raised its rate to 9% a few years ago. In addition, this tax reform package pumps an additional $4 million per year into tourism promotion, which is a proven way to increase business within the hospitality industry.   And to be honest, when is the last time you went on vacation and decided you were going to go to one state because you didn’t want to pay the extra 75 cents on a $50 dinner.

Lastly, I’ve heard the MYTH There is no harm in signing a petition for a People’s Veto.
Well, the TRUTH is, that while this may sound reasonable, it is simply a political ploy. If a People’s Veto is put on next June’s ballot, which will happen if enough signatures are collected by September, tax reform will not go into effect in January 2010 in synch with a new tax year, and Mainers will lose $57 million in reduced tax burden, just when we need it most. We also lose positive momentum. If the next year is a period of uncertainty, one of tax reform’s primary goals, specifically, spurring economic growth, will be lost.

I personally have worked hard and dedicated much of my time in Augusta and across the State to helping create more jobs.

In fact, when I went door to door during my campaign I kept hearing a similar theme from many folks on their front porches.  “How lucky your mother must be to have you come back to Maine,” I was frequently told, or “I wish my son Bobby could move back.”  And so it has become the overarching theme of my work and the most important of my goals in Augusta; I want to bring my friends back to Maine.

I am one of the lucky ones.  I am lucky that I was able to move back to Maine, but I often joked that in order to get a job in this State, I had to run for the legislature.

But in all seriousness, there is a Brain Drain in Maine, it is real.  There are other 20-somethings who were raised in Maine, educated in Maine on the dime of Maine Taxpayers, graduated from Maine high schools and colleges but are currently living and working in New York, and Hartford, and Boston, Providence, Concord and Portsmouth.     So the money that we have invested in our children, though our schools, through our Universities, through our community groups and charities, well, that investment is paying off for other States.  My friends and their families would like nothing more than to take a job in Maine and build a life the way people have done in previous generations.

And so I believe Tax Reform is a key component of Maine’s economic recovery.  It goes hand in hand with other important pieces of legislation that I worked tirelessly on.  Namely, the bill which expanded Pine Tree Zone Tax Benefits state wide, and most importantly, right here in Cumberland County, which previously only included the Sappi Mill in Westbrook but is now open to the entire county.

Secondly, the bill I may have spent the single most time on, was a historic piece of energy legislation that will have profound effects on our economic recovery and I believe countless benefits to future generations.

Imagine what lower energy rates will do for small businesses. Think of the money households will save after their homes are weatherized.  Picture the economy that Maine can boast when dollars spent on energy go to Mainers instead of the Middle East.

The legislation will be the start to a multiyear vision that will create thousands of good-paying jobs; develop a market for energy efficiency, green construction and renewable energy sources that could result in a $300 million industry; and drastically cut energy costs for businesses, industrial consumers, and residential users.  This all comes with the added benefit of lowering the states energy usage which will have clear environment benefits.

The bill was LD1485, An Act Regarding Maine’s Energy Future. The most important aspect of the bill is to consolidate and streamline efficiency programs in Maine. By creating a more centralized, easier to access, one-stop-shop for efficiency programs we will be better positioned to give homeowners and business owners alike the resources they need to drive the market. This single government entity will enable more value for dollars spent, eliminate confusing and burdensome red tape, and provide transparency in the use of the funds.

Lastly, I want to talk about the cuts to State Government.  As you may know, 80% of state spending is on Education and Health and Human Resources.  So it wasn’t without pain that we were able to balance the budget.  When all was said an done, we cut state spending by 20%, resulting in the first time in decades that the state’s budget was lower, in real dollars, than the previous year.

All in all, I am proud of the work we did in the legislature.  The upcoming session will continue to have more challenges.  But I am confident that we will continue to meet them head on and address issues in a bipartisan fashion.  More importantly, I hope to continue to be a major part of the progress on the issues most important to me; creating more opportunity for young people to get good paying jobs and affordable housing, improving the education that we provide for our states children, decreasing our state’s energy usage at all levels residential, commercial, and industrial, simultaneously driving down the cost of energy, and finally, to continue to move our state forward so that all Mainers can more easily tread the path to prosperity.

It is in challenging times like these, that we are afforded unique opportunities.   But I will never forget that it is at the local level; schools and churches, nonprofits and community groups, Kiwanis Clubs and Chambers of Commerce who do the most good for the people of this State.  It is my belief that we must to continue to support groups just like this, if we are to be successful in Moving Maine Forward.

I remember getting the Terrific Kid Award, I was a member of the Scarborough Key Club, and I know how important this group of dedicated individuals is to the success of past, current, and future generations of Scarborough kids.  So thank you for all that you for the opportunity to speak to you today, thank you for your commitment, and thank you for all that you do for the children in this town.

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