MD Income Tax Case Before US Supreme Court Today

November 12, 2014

The long-running legal dispute over the nature of county income taxes in Maryland takes a major step today, as arguments will be heard before the United States Supreme Court. From coverage in the Washington Post:

At issue in Comptroller of the Treasury of Maryland v. Brian Wynne is whether residents are entitled to a tax credit for certain income earned outside the state.

Maryland allows shareholders of some companies to deduct taxes paid to other states on their Maryland returns. But that deduction doesn’t apply to the so-called “piggyback tax” — the county segment of the state income tax that Maryland collects and distributes to the 23 counties and Baltimore City.

Read the full Post coverage.

 

Read these previous items from Conduit Street for more background:

MACo Joins Powerhouse Wynne Case Brief Before Supreme Court

SCOTUSblog Contributor Offers Legal Analysis of Pending Wynne Case

Supreme Court Will Hear Maryland Income Tax Case

 

 


Baltimore City Council to Take Up Bag Tax Legislation

November 6, 2014

Legislation to impose a 5 cent fee on each plastic bag used at a grocery store and other merchant locations received approval by a Baltimore City Council committee this week.  The full Baltimore City Council is scheduled to take up the measure Monday, November 10.

As reported by the Baltimore Sun,

A majority of City Council members support the bill. And Councilman James B. Kraft, the bill’s sponsor, who has spent a decade pushing for the measure as way to reduce litter, said he is confident that the fee will pass.

But several council members raised concerns about a new fee after Tuesday’s election, in which Republican Larry Hogan won the gubernatorial race. Hogan had put a spotlight on what he characterized as high taxes and government-imposed fees.

According to the bill’s sponsor, the bill has been introduced to change behavior, not generate revenue.

Under Kraft’s bill, retailers would keep a penny and a half for each plastic bag to offset their costs. The rest — an estimated $1.5 million in the first year — would go to city coffers.

Kraft said he wants the money raised to clean up the harbor and city parks, though he said the measure isn’t intended to be a money-maker but to discourage the use of plastic bags.

If approved by the Council, the measure would take effect April 1, 2015.


Cecil County Officials to Hold Meeting Over Tolls

November 4, 2014

In preparation for a meeting  with the Maryland Transportation Authority (MdTA), Cecil County officials are soliciting input from constituents for toll relief.  As reported by the Cecil Whig,

Council President Robert Hodge and County Executive Tari Moore are asking for any and all stakeholders seeking a reduction in tolls, especially for multi-axle vehicles, to attend a preparation meeting at 2 p.m. on Nov. 13 in the Elk Room.

“We want all ideas on the table,” Hodge said. “We hope to develop a plan of action for our presentation.”

The meeting with MDTA is scheduled for November 20. Cecil Officials plan to discuss tolls at the Hatem and Tydings bridges on Route 40 and Interstate 95.


Oregon Set To Launch Volunteer VMT Road Tax

November 4, 2014

An October 27 Oregonian article reported that Oregon is ready to launch a vehicle miles traveled (VMT) or “pay-as-you-drive” road tax.  The program is seeking 5,000 volunteers to participate in a public trial starting on July 15, 2015.  The article  summarized seven key discussion points from a Oregon Department of Transportation (ODOT) “listening tour” in Portland.  Several of the points included:

2. Drivers will be charged 1.5 cents a mile. They will be able to track their distances using everything from a GPS tracker to an odometer device to a daily diary. “GPS will be the most hassle-free option,” said Michelle Godfrey, a road usage charge program spokeswoman. “But it’s also the option that people tend to dislike the most.”  …

3. Trial drivers will get a monthly bill, with ODOT sending rebate checks to offset money spent on the 30-cents-per-gallon gas tax. And that’s where things start sounding a bit convoluted. Rebate checks? So, would drivers be just giving the government an interest-free loan for road construction?

4. This is just one step in a long process to possibly build momentum for a widespread road-user tax. From the pamphlet that was handed out to meeting participants: “Oregon’s Senate Bill 810 was the first legislation in the U.S. to establish a RUCP for state transportation funding. The bill authorized ODOT to set up a mileage collection system for volunteer motorists, assess a charge of 1.5 cents per mile for up to 5,000 cars and light commercial vehicles, and issue a gas tax refund to participants. The volunteer program will not be another pilot project but rather the start of an alternate method of generating sustainable revenue to pay for Oregon highways.  …”

5. ODOT will use a private vendor to handle the accounting and management of the road tax.

6. Although ODOT is promising stiff penalties for fraudulent reporting, the state guarantees that it will protect “personally identifiable” information.

Nationwide, interest in the VMT revenue model has been spurred by declining gas tax revenues that have not kept pace with road construction costs and have been further depressed by higher fuel efficiency standards.  Opponents cite the disproportionate effect the tax will have on certain segments of the population, such as people living in rural areas, and privacy concerns.  In Maryland, MACo has opposed proposals that would tie local land use planning to reducing VMTs.

 


SCOTUSblog Contributor Offers Legal Analysis of Pending Wynne Case

October 31, 2014

In an October 28 SCOTUSblog article, Santa Clara University School of Law Associate Dean Bradley Joondeph offered a summary and legal analysis of the pending United States Supreme Court case, Maryland State Comptroller of the Treasury v. Brian Wynne. The case will address the Constitutional parameters on state and local governments collecting income from residents that was earned in other states.  A negative decision could cost Maryland local governments approximately $50 million a year. From the article:

This case thus presents an important, unanswered question: Does the dormant Commerce Clause permit a state to collect a tax on all of a resident’s personal income, even when a portion of that income is earned in – and taxed by – another state?  …

Wynne lies at the confluence of three basic constitutional principles in the field of state taxation. First, as the Court has held on several occasions, states have the authority “to tax all income of their residents, including income earned outside their borders.” (This is often called residence-based jurisdiction.) Second, states also have the authority to tax the income of nonresidents, but only to the extent of the income earned within the state’s borders. (This is often called source-based jurisdiction.) Third, as a general rule, taxes resulting in multiple state-level taxation of the same value – whether that value be income, property, or something else – violate the dormant Commerce Clause, as they subject interstate commerce to a burden intrastate commerce does not shoulder.

Each of these points is undisputed. The question is how they are to be reconciled here.

The article summarized the background of the Wynne case and analyzed the arguments of both sides before concluding:

Ultimately, the case seems to turn on whether the Justices consider a personal income tax, imposed by a state on its own residents, qualitatively different from taxes imposed on corporations or nonresidents. If so, Maryland’s decision to collect a tax on one hundred percent of its residents’ income (without any sort of offsetting credit) would seem justified, a reflection of the special relationship between a sovereign and the natural persons residing within its borders. But if the Court sees Maryland’s tax – at least for purposes of the dormant Commerce Clause – as indistinct from other taxes a state might impose on interstate business activity, Maryland’s scheme almost certainly must fall, as it flunks two long-standing doctrinal requirements: it virtually assures that residents earning out-of-state income will be subjected to multiple taxation, and it systematically favors intrastate over interstate commerce.

This case presents a fascinating collision between the imperatives of state sovereignty and free markets – between the states’ autonomy in matters core to their separate existence, and the axiom that commerce among the states must be protected from parochial trade barriers. State tax disputes generally don’t raise fundamental questions about the role of the states in our constitutional structure. But this one does.

Oral arguments for the Wynne case are set for November 12.  MACo has joined with other parties in an amicus brief submitted by the International Municipal Lawyers Association, arguing in favor of the Comptroller’s position.  The United States is also participating as an amicus on the side of Maryland.

Prior Conduit Street Coverage


Cecil County Receives Full Share of Casino Revenues

October 30, 2014

With the opening of the Horseshoe Casino in Baltimore City, Cecil County is now receiving its full share of local development impact funds generated by casino revenues.

As reported by the Cecil Whig,

When the Maryland General Assembly passed slots legislation in a 2007 special session, a provision in the bill diverted 18 percent of local development impact funds from all slots locations, including Cecil County, to Baltimore City and Prince George’s County for 15 years.

However, because of another amendment added to slots legislation by Delegate David Rudolph (D-Cecil) during a 2012 special session, the law was changed to return the 18 percent back to Cecil, Allegany and Worcester counties once a casino opened in Baltimore City.

Craig Whiteford, Cecil County Budget Director, has indicated that the additional revenue has already been factored into county’s budget.

Whiteford said the county’s share in Fiscal Year 2014 that ended June 30 would have been $713,702 higher if the 18 percent was not being deducted. He projects that number, based on current revenues generated at Hollywood Casino Perryville to be about $600,000 in Fiscal Year 2015.

“This is not extra money for the county budget,” Whiteford cautions. That’s because the county finance department has already built these projections into their budget.

This fiscal year the impact aid has been allocated to substance abuse initiatives.


New Report Urges Changes to the Tax Sale Process

October 29, 2014

A new report released by the Abell Foundation urges changes to the tax sale process in Baltimore City.

As reported by the Baltimore Sun,

The report calls on Baltimore officials and the Maryland General Assembly to add protections for owner-occupied homes and simplify a city system that often confuses homeowners, enriches investors and adds to the number of vacant properties that line neighborhood streets.

Tax sale reforms have been raised in the past and statewide legislation passed in 2008 to provide additional protections to homeowners and to improve the fairness and accountability of the tax sale process generally. However, the fair application of public taxes and charges necessitates that these be paid by all taxpayers – sporadic or uneven implementation simply permits some to avoid paying while the vast majority bears their fair share of the costs of public services. Property taxes are the primary source of revenue for government budgets and holding or the potential of a tax lien sale is an effective way for local governments to collect the money to pay for critically needed local services, such as education, police and fire protection.

From the Sun story, Mayor Stephanie Rawlings-Blake noted the City’s multiple advances on these fairness issues:

Mayor Stephanie Rawlings-Blake said she’s committed to finding ways to make sure residents can stay in their houses, but her administration sees the $250 threshold as constructive by forcing homeowners to address the debt before it grows any larger.

Rawlings-Blake pointed toward multiple programs the city has in place to help low-income and elderly residents, including discounts on water bills, savings accounts for future tax bills and energy assistance. She said the city also has an early warning system in which city agencies reach out to identify residents at risk of losing their homes.

 


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