Maryland General Assembly: Senate budget bill raises rates for most taxpayers
The Dundalk Eagle on March 25, 2012
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New flat tax on those earning over $500,000
by Bill Gates
The Maryland State Senate passed a budget bill last week that raises state income taxes for just about everyone who already pays taxes — although some were raised more than others.
The bill, under which most state residents would pay a quarter-percent more in income tax, is expected to raise $440 million in additional tax revenue.
Additionally, state residents who report an income of over $500,000 would pay a new flat tax. It would effect about 15,000 families and cost them approximately $2,700 a year in additional taxes.
The bill now goes to the House of Delegates, which is working on its own budget plan.
“The Senate budget is yet another example of heaping tax increases on the working-class families of our district and Maryland — and at the worst possible time,” Del. John Olszewski Jr. (6th District) said.
“I strongly oppose the $400 million tax hike included in the [Senate] budget. What they have proposed impacts everyone making over $3,000 a year, and would enact an unprecendented tax provision where the highest earners would pay the highest tax rate available not just on money above a certain amount, but on every dollar earned,” Olszewski said.
Under the Senate plan, families making $50,000 per year would pay $44 more in taxes; families earning $90,000 would see a $91 annual increase; those reporting an annual income of $150,000 would pay an additional $208; and those reporting $255,000 would pay an additional $475.
The additional flat tax on households making over $500,000 per year, while it would generate about $45 million in revenue the first year, “is a terrible idea and sends the wrong message,” Olszewski said. “It suggests that Maryland penalizes success.”
The House budget, which had not been voted upon as of Tuesday, would raise taxes and lower exemptions for those making over $100,000 (single) and $150,000 (jointly) a year in adjusted income (after deductions are taken).
The House also removes the “Amazon Tax” approved by the Senate: applying the state sales tax to online purchases.
“I don’t like either budget; they still have higher taxes,” Del. Joseph “Sonny” Minnick (6th District) said. “I have made a committment that I will not vote for any new taxes, or to raise existing taxes.”
Olszewski favors the House budget over the Senate plan, but thinks the House can do more.
“I applaud the House for going deeper with cuts and scaling back the tax increases,” Olszewski said. “While in my view the House budget is significantly better than the Senate plan, I still believe that more savings to the state could be realized by additional cuts, and will continue to advocate for these cuts.”
According to Olszewski, the House plan will impact only 10 percent of the people in Baltimore County.
Both budget plans would see Baltimore County face considerably fewer cuts than otherwise possible, according to Olszewski.
Under the “doomsday” budget, in which no taxes are increased and the deficit is closed solely through cuts, Baltimore County would lose $20 million in funding from the state.
The county would lose $5 million under the Senate plan, and $2.5 million in the House version.
“Obviously, the more cuts that are made, the more impact that individuals will feel in Dundalk-Edgemere and elsewhere,” Olszewski said. “On the proposed revenue side, almost everyone in the area will be paying more under the Senate plan, while less than 10 percent — and likely less than five percent — would pay more under what is being considered [in] the House plan.”
Minnick said he will “reserve the right” to listen to the House debate the budget before deciding how he will vote.
“We need to go through the budget with a fine-toothed comb, and we’ll find a lot of savings,” Minnick said. “Not just in the University of Maryland system, but in all departments. No one ever talks about that, until you cut their budget. Then they start looking for ways to reduce spending.”