Quick look at Maine Tax Revenues from 2000 to 2013

THERE’S been a bit of discussion on the twittersphere about Maine tax revenues, with some arguing that the record highs in tax revenues legitimizes the LePage Administration’s tax policies–in short, the supply-side argument that cuts to the tax rate will increase economic growth and tax revenues.  Specifically, some have noted that Maine is generating “record” tax revenues.  I’m not going to delve into the theoretical/empirical discussion about the theory (if you want to, see here, here, here, here, here, here, and here for those who believe tax cuts do not increase revenues, here, here, here, here, here, here, and here for those who do) but point out a couple of things vis-a-vis the data on Maine.

Comparing nominal tax revenues from different time periods is flawed.  One needs to account for inflation, population growth, and the like to create a more accurate picture of tax.  The higher the inflation and/population growth, the larger the nominal tax revenues will likely be.  Using data from the Maine State Office of Fiscal and Program Review, as well as population data from the Census Bureau, the two graphs show total tax revenues (both in nominal and 2013 dollars) and tax revenues per capita (again, both in nominal and 2013 dollars):

(click images to enlarge)

Maine tax revenues 2000 to 2013

Maine Tax revenues per capita

The two charts follow very similar paths largely because Maine’s population has remained fairly steady (annual growth rate of roughly 0.3%).  While in nominal terms Maine did have a record year in tax revenues ($3,056,234,628 estimated), in inflation adjusted dollars the 2013 estimates fall short of the pre-recession high of $3,376,132,000 in 2007.  Given the weakness of the national and state economies, it’s not surprising that Maine tax revenues have not climbed back to their pre-recession levels.


John Haskell

About John Haskell

John graduated from the University of Southern Maine with a degree in Political Science, and from the University of Maine School of Law. He has worked in both the public and private sectors, and currently, works with a small business services company in the Mid-Coast area.