Sec. 17. 36 MRSA §5275, sub-§1, as enacted by P&SL 1969, c. 154, §F, is amended to read:

1. An amount less than wages. As the amount of the wages shown on his that individual's return for any taxable year an amount less than such wages actually shown, or unless:

A.__Such statement did not result in a decrease in the amounts deducted and withheld; or

B.__The taxes imposed with respect to the individual under this Part for the succeeding taxable year do not exceed the sum of the payments of estimated tax that are considered payments on account of such taxes.

Sec. 18. 36 MRSA §5275, sub-§2, as amended by PL 1979, c. 378, §44, is repealed.

Sec. 19. 36 MRSA c. 841, as amended, is repealed.

Sec. 20. Application. This Act applies to tax years beginning on or after January 1, 2006.

SUMMARY

This bill repeals the existing graduated income tax rates and provides for graduated tax rates based on a percentage without any deductions or personal exemptions. Income below the federal poverty level is exempt from the income tax.

The tax rates are 1% for income less than $50,000; income of at least $50,000 but less than $100,000 is taxed at 5%; income of at least $100,000 but less than $1,000,000 is taxed at 8%; and income of $1,000,000 or more is taxed at 10%.