Read the full report | The Business Equipment Tax (BET) is a bad tax because it is aimed at the very creator of economic growth—business capital formation. Investing in business capital helps to increase productivity which leads to an increase in output and wages. However, the BET punishes, with a higher tax bill, businesses that are making capital investments—ultimately reducing long-term economic growth in Maine.
Therefore, it is not surprising to hear numerous business owners and policymakers clamoring for a repeal of the BET. A partial attempt at repeal, called the Business Equipment Tax Rebate (BETR), was enacted into law in 1995. It was fatally flawed.
The BETR program:
1. Is susceptible to budgetary gimmicks that erode the incentive for businesses to invest.
2. Adds to the gauntlet of paperwork and bureaucracy that businesses must deal with.
3. Creates an inefficient and unfair distribution of benefits across business types and geographic locations.
4. Creates an inefficient and unfair loophole, known as “double-dipping,” between BETR and Tax Increment Financing.