An Act To Establish a Flat Tax Rate for the Maine Income Tax
Maine Legislature, Session 121, LD 0654
Committee: Taxation
Sponsors: CRESSEY, BERRY, JOY, MOORE, SNOWE-MELLO, VAUGHAN
Amends: 1 MRSA §815, 36 MRSA §3321, 36 MRSA §5111, 36 MRSA §5111-A, 36 MRSA §5124-A, 36 MRSA §5126, 36 MRSA §5160

12lst MAINE LEGISLATURE 
Legislative Document 
No. 654 
H.P.484 
House of Representatives, February 11,2003 
An Act To Establish a Flat Tax Rate for the Maine Income Tax 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Representative CRESSEY of Baldwin. 
/!l~/h.77#£~ 
MILLICENT M. MacFARLAND 
Clerk 
Cosponsored by Representatives: BERRY of Belmont, JOY of Crystal, MOORE of Standish, 
SNOWE-MELLO of Poland, VAUGHAN of Durham. 
Printed on recycled paper 
Be it enacted by the People of the State of Maine as follows: 
§2, 
Sec. 1. 1 MRSA §815, first " 
is amended to read: 
as enacted by PL 2001, c. 328, 
Notwi thstanding any other provision of law, if an entity 
that has 
taken property by eminent domain fails to use 
the 
property for the project or purpose for which that property was 
taken, the condemnee or the condemnee' s heirs have a right of 
first refusal to purchase 
the property as 
provided in this 
section. 
The right may be exercised at a price equal to the 
total compensation paid to the condemnee for the taking plus an 
adjustment for any improvements made to the property and for 
changes in inflation based upon the Consumer 
Price 
Index as 
ee£iHee-~~-~~~~-~~7-~~~-~49~7-~~-1. 
The right of 
first refusal automatically terminates once the property is used 
for the project or purpose for which that property was taken. 
The purpose of a 
taking may be passive in nature, 
including 
conservation or preservation. 
As used in this section, "Consumer 
Price Index" means the average over a 
l2-month period of the 
National Consumer Price Index, not seasonally adjusted, published 
monthly by the United States Department of Labor, Bureau of Labor 
Statistics and designated as the "National Consumer Price Index 
for All Urban Consumers -- United States City Average." 
Sec. 2. 36 MRSA §3321. sub-~2, as enacted by PL 2001, c. 688, 
§8, is amended to read: 
2. 
Method of calculation; inflation index defined. 
The 
inflation index for 2003 is 1.118, representing annual inflation 
adjustments for the years 1999 to 2002, inclusive. 
Starting in 
2004 
and every year 
thereafter, 
the inflation index is 
the 
Consumer Price Index as-ee~iBe4-~~~~~-~r-&a~~g~beH-l for 
the 
calendar 
year 
ending 
on 
the 
December 
31st 
immediately 
preceding the calculation date, divided by the Consumer Price 
Index for the prior calendar year. 
As used in this subsection, 
"Consumer Price Index" means the average over a l2-month period 
of the National Consumer Price Index, not seasonally adjusted, 
published monthly by 
the 
United States Department of 
Labor, 
Bureau 
of 
Labor 
Statistics 
and 
designated 
as 
the 
"National 
Consumer Price Index for All Urban Consumers --
United States 
City Average." 
Sec. 3. 36 MRSA §5111. as amended by PL 1999, c. 731, Pt. T, 
§§2 to 7, is repealed. 
Sec. 4. 36 MRSA §5111-A. as repealed and replaced by PL 1987, 
c. 819, §3, is repealed. 
Sec. 5. 36 MRS A §5111-C is enacted to read: 
Page l-LR1516(1) 
§5111-C. 
Imposition and rate of tax 
1. 
Resident. 
A tax is 
imposed 
for 
each taxable 
year 
beginning on or after January 1, 2004 on the Maine taxable income 
of every resident individual of this State. 
The amount of the 
tax is 5'l-0. 
2. 
Additional tax. 
Additionally, a tax is imposed for each 
taxable year beginning on or after January 1, 1989 on the Maine 
adjusted gross 
income 
of 
every 
nonresident 
individual. 
The 
amount of the tax equals the tax computed under this section and 
chapter 805, as if the nonresident were a resident, multiplied by 
the ratio of the individual's Maine adjusted gross income, 
as 
defined in section 5102, 
subsection 1-C, 
paragraph B, 
to the 
nonresident's entire federal adjusted gross income as modified by 
section 5122. 
Sec. 6. 36 MRSA §5124-A. as amended by PL 1989, c. 596, Pt. 
J, §7, is repealed and following enacted in its place: 
§5124-A. 
Standard deduction; resident 
The 
standard 
deduction 
for 
resident 
taxpayers 
who 
are 
married persons filing jointly is $30,000, the standard deduction 
for persons filing as heads of households is $20,000 and the 
standard deduction for all other resident taxpayers is $10,000. 
Sec. 7. 36 MRSA §5126. as amended by PL 2001, c. 583, §16, lS 
repealed. 
Sec. 8. 36 MRSA §5160. as amended by PL 1993, c. 395, §19, is 
further amended to read: 
§5160. 
Imposition of tax 
The tax is imposed, at the 
~ate6 rate provided by section 
9;1,;1,;1, 5111-C for resident individuals, upon the taxable income of 
estates and trusts. The tax must be paid by the fiduciary. 
Sec. 9. 36MRSA§5224-A. as amended by PL 1989, c. 596, Pt. 
J, §5, is further amended to read: 
§5224-A. 
Return of part-year resident 
If an 
individual 
changes 
that individual's status 
as 
a 
resident individual or nonresident individual during the taxable 
year, the individual shall file a nonresident return pursuant to 
section 5220, subsection 2. 
That individual's tax 6sa±± must be 
computed, pursuant to section 911! 5111-C, subsection -4-
Z, as 
if that individual were a nonresident individual, except that the 
numerator 
of 
the 
apportionment 
ratio 
6Rall--se--eemp~i6ea--ef 
comprises 
the 
individual's 
Maine 
adjusted 
gross 
income, 
as 
defined in section 5102, subsection l-C, paragraph A, 
for the 
portion of the taxable year during which that individual was a 
resident T plus that individual's Maine adjusted gross incomeL 
as 
defined in section 5102, subsection 1-C, paragraph B, 
for the 
portion of the taxable year during which that individual was a 
nonresident. The part-year resident 6Rall is also se entitled to 
the 
credit provided 
by 
section 
5217-A, 
computed 
as 
if the 
individual's Maine adjusted gross income for the entire year we~e 
comprised only ef that portion wRieR that is attributed to the 
portion of the year during which that individual was a resident. 
Sec. 10. 36 MRS A §5250, sub-§2. as amended by PL 1997, c. 668, 
§§36 and 37, is repealed. 
Sec.H. 36 MRS A c. 841. as amended, is repealed. 
Sec. 12. Application. 
This Act applies to tax years beginning 
on or after January 1, 2004. 
SUMMARY 
This bill changes the existing graduated income tax program 
into a flat tax rate for 
income tax, effective for tax years 
beginning on or after January 1. 
~004.