In his tax reform plan, Gov. Paul LePage would eliminate state aid to towns. But for every $1 he took away from towns, he’d give back $4 to the towns’ residents by lowering income tax brackets (reducing the top bracket in 2016 from 7.95 percent to 6.95 percent, eventually to 5.75 percent by 2019). All taxpayers would get reductions, with 60,000 taxpayers eliminated completely from the tax rolls. See “Tax Reform & Relief Plan” at www.maine.gov/governor/lepage/publications.

LePage tells towns not to worry about lost state aid. Residents, flush with his income tax give-backs, will be quite willing to pay towns higher taxes to replace the lost state aid.

(The governor’s refund works out to $8 for Lincoln County residents because they pay income taxes well above the state average. See columns A-C in chart.)

What’s LePage up to? He argues that cutting the highest income tax brackets (and eliminating the estate tax) would stop the current exodus of a key economic component, well-to-do seniors. Their accountants tell them it’s too expensive to live (or die) in Maine.

It would also encourage those wealthy who live here in fair weather (but carefully only 179 days to avoid residency and Maine taxes) to reside here year-round. And, not only pay Maine income taxes but also bring with them their primary disposable incomes, building or winterizing permanent homes, buying cars and luxury goods (and enhancing sales tax revenue).

The governor’s plan is a classic economic conundrum: will lower taxes on the wealthy retain and even attract higher numbers of the wealthy, their purchasing power, greater tax revenue and economic growth. Wouldn’t this help generate the very jobs moderate and low income families eagerly seek?

Making Maine a leading year-round senior and retirement destination is one of the few cards the state can play in desperately needed economic development.

Two problems. First, towns would have to increase property taxes up to 3.6 percent (e.g.: Whitefield) to replace lost state aid. See columns (D) and (E) in the chart.

Second, the state would have to broaden and raise the sales tax from 5.5 percent to 6.5 percent to make up for lost income tax revenue. Increasing property and sales taxes could hit lower income families hard despite the relief measures built into the governor’s plan (page 5, scenarios 3-5).

This issue — and the governor’s corollary that lower income and estate taxes (and also corporate taxes) will help attract outside investment — will be debated heatedly in the next few weeks in the Legislature. Republicans want economic development — and jobs — as a priority. Democrats see defending moderate to low income families as more critical.

Yet, the imperative for economic development and jobs — long overdue — is getting stronger every day.