Troy Jackson at Nomination
Troy Jackson would impose a 60.35% combined federal-state tax rate on Maine businesses
Maine Senate Democrat nominee Troy Jackson has spent 20 years in the Maine Legislature but still does not understand that tax hikes will make his state less affordable.
In an August 15 post, Troy Jackson declared: “When I’m in the U.S. Senate, I’II fight to scrap the payroll cap” which will increase payroll taxes. This would hit Mainers with a combined federal-state tax rate of 60.35%. Small-to-midsized businesses and the self-employed will be especially hard hit.
The math is as follows:
37 percent top federal income tax rate
12.4 percent payroll tax applied to income above $184,500.
2.9 percent Medicare payroll tax
0.9 percent additional Medicare payroll tax
7.15 percent Maine top state marginal income tax rate
= 60.35% Jackson top combined federal-state tax rate on Maine households and businesses.
(And households and businesses earning over $1 million would be hit with another 2% tax, for a total of 62.35%.)
Small-to-midsized businesses run on tight margins. How will they be able to afford the Jackson tax? Let people go? Raise prices? Both? Many wouldn’t survive at all.
Small business groups have weighed in against the payroll tax hike.
In testimony to congress, the National Federation of Independent Business said:
“85% of small businesses are organized as pass-through entities for federal tax purposes and report their business earnings and expenses on their individual tax returns.”
“As a result, business income earned through pass-through entities such as S-Corps, sole proprietorships, and partnerships would be subject to these additional Social Security taxes.”
“At a time when small businesses continue to struggle with inflation, labor shortages, rising borrowing costs, and general economic uncertainty, Congress should not impose another significant tax increase on entrepreneurship and job creation.”
Higher payroll costs mean smaller paychecks for workers, higher costs for employers and consumers, fewer opportunities for wage growth, or some combination of all three. Higher labor costs mean businesses will have less money to invest, expand, or hire.
By the Small Business Administration’s report, Maine has over 150,000 small businesses making up 99.2% of the total businesses in the state.
If the goal is to make Maine more affordable and competitive, raising the cost of employing Mainers is a strange way to get there.