An Act To Create an Income Tax Stabilization Program
Maine Legislature, Session 123, LD 1379
Committee: Taxation
Sponsors: TARDY, NASS, CHASE, HOTHAM, KNIGHT, LANSLEY
Amends: 36 MRSA §5111-C

Legislative Document 
No. 1379 
H.P.971 
House of Representatives, March 13,2007 
An Act To Create an Income Tax Stabilization Program 
Reference to the Committee on Taxation suggested and ordered printed. 
Presented by Representative TARDY of Newport. 
Cosponsored by Senator NASS of York and 
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MILLICENT M. MacFARLAND 
Clerk 
Representatives: CHASE of Wells, HOTHAM of Dixfield, KNIGHT of Livermore Falls, 
LANSLEY of Sabattus, SA V AGE of Falmouth. 
Printed on recyded paper 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1. 36 MRSA §5111-C is enacted to read: 
§5111-C. Revenue targeting 
1. Definitions. As used in this section, unless the context otherwise indicates, the 
following terms have the following meanings. 
A. "Adjustment factor" means a number applicable to a tax year determined by 
dividing the target revenue for the numerically identical fiscal year by the tax revenue 
for that fiscal year, rounded to the nearest 111,000. 
B. 
"Target revenue" means $1,400,000,000 for fiscal year 2007-08 and for 
subsequent fiscal years. 
C. "Tax revenue" means undedicated General Fund individual income tax revenue 
arising pursuant to this Part. 
2. Rate adjustment. Annually, by September 15th, the State Tax Assessor shall 
determine for the current tax year whether tax revenue for the fiscal year ending the prior 
June 30th exceeded the target revenue. If target revenue was exceeded, the State Tax 
Assessor shall adjust the tax rates as specified in the tax rate tables in section 5111, as 
adjusted for the prior tax year pursuant to this section, by multiplying the percentage rates 
by the current tax year's adjustment factor. The State Tax Assessor may not adjust the 
rates for single individuals and married persons filing separate returns with taxable 
income of $30,000 or more; for unmarried individuals or legally separated individuals 
who qualify as heads of households with taxable income of $45,000 or more; and for 
individuals filing married joint returns or surviving spouses permitted to file a joint return 
with taxable income of $60,000 or more. 
3. Revenue Targeting Fund. The Revenue Targeting Fund is established to carry 
out the purposes of this section. For fiscal year 2007-08 and for each subsequent fiscal 
year up to and including the fiscal year ending during the calendar tax year in which the 
limitation pursuant to subsection 4 is reached, tax revenue exceeding $1,400,000,000 
must be deposited to the Revenue Targeting Fund, the balance of which does not lapse 
but carries to the subsequent fiscal year. 
Tax year 2008 and subsequent tax year 
individual income tax refunds must be paid from this fund until the fund balance carried 
forward from the prior fiscal year is reduced to zero. 
4. Limitation. The cumulative rate reduction attributable to this section may not 
exceed 20% of the tax year 2007 rates. 
5. Rounding. Adjustments in tax rates arising pursuant to this section are rounded to 
the nearest 111 0 of a percent, and the total dollar amount of the tax on taxable income 
equal to the lower limit of the income brackets is rounded to the nearest dollar. 
SUMMARY 
This bill proposes to stabilize individual income tax receipts until a reduction of 20% 
is achieved in the future. The bill provides a mechanism to reduce individual income tax 
rates periodically until they are 20% less than the 2007 rates, without reducing the 
anticipated receipt of revenue. 
The mechanism to achieve the periodic reductions is an adjustment factor using the 
current income tax revenue target for fiscal year 2007-08 of $1,400,000,000. A 
comparison of the actual fiscal year revenue excess to the target amount provides the 
measure by which tax rates are to be adjusted downward for the tax year. This process 
repeats itself annually until the cumulative 20% reduction is reached.