You may have heard that President Trump’s Big Beautiful Bill — which took effect on New Year’s Day — contains a provision that repeals taxes on tips and overtime.
You may also have heard that Gov. Janet Millstone and her fellow Democrats in the Legislature oppose aligning Maine’s tax code with these working-class tax cuts. Mainers in the hospitality and construction industries will get real relief on their federal tax returns, but not a dime of relief when they file their Maine returns.
Is anyone surprised?
Less well known is Millstone’s insistence on maintaining a confiscatory tax rate of over 100 percent on the profits of many small business owners.
How can that be, you ask?
That’s because Research and Development (R&D) costs (think technology, broadband, computer software, and even shipbuilding) are taxed differently. The Big Beautiful Bill repealed this job-killing provision in the federal tax code, but Millstone has doubled down on keeping it in the Maine tax code.
I know a small-business owner in the greater Bangor area with 30 employees who paid a tax equivalent to 118% of his profits in 2024. He literally had to borrow money to stay in business last year.
Many hundreds of Maine businesses and their thousands of employees remain under the thumb of the so-called “R&D amortization” requirement.
It’s so bad that even Massachusetts has done away with it, not to mention neighboring New Hampshire.
Until this is fixed, Maine will never attract another tech business to set up shop here, and we risk losing the hundreds we currently have. And it’s not just tech businesses getting hammered — even some shipbuilders and construction companies are being hit.
Here’s what you can do to help:
The good news is that our pathetic lame-duck Governor doesn’t have the final say on this.
The Taxation Committee at the Statehouse in Augusta will be sending tax-conformity legislation to the floor of the House of Representatives sometime between now and adjournment in April. We need to put pressure on Democrat chair Sen. Nicole Grohoski and the committee to send a full conformity bill to the floor for a vote.
You can reach Grohoski at (207) 358-8333 or grohoskiformaine@gmail.com.
I would also suggest contacting Sen. Trey Stewart (R-Presque Isle). Trey is the Minority Leader in the state Senate, where the bill will go after the House acts. Trey is a good guy, and we need to encourage him to fight for full conformity.
You can reach Trey at (207) 227-0569 or trey@treystewart.com.
Let me know what you hear.
Hon. Lawrence Lockman
Maine House of Representatives, 2012-2020
Co-founder & President
Maine First Project