Governor’s Tax Plan Faces Uphill Battle

In an opinion piece for the Gazette, Barry Rascovar discusses the Governor’s tax proposals that have been introduced as part of his budget balancing plan and it’s uphill battle to seek passage.  Mr. Rascovar also shares that in his opinion, these types of tax changes are good tax policy.

The irony is that both extending the sales tax to gasoline and reducing tax breaks for families earning over $100,000 annually make sense as tax policy.

A gradual phase-out of some tax breaks for more affluent wage-earners would add progressivity to the Maryland tax code.

A sales tax on motor vehicle fuel, in addition to a flat fee, already is the law in seven states. It allows the transportation department to compensate for inflation — a key missing ingredient.

However, the Governor’s tax plan “won’t pass as introduced.”

For one thing, a three-year phase-in means legislators will be adding another six to eight cents to the gas levy in 2014 — when they’re running for re-election.

That’s a political nightmare for any Democrat considering another term in the State House.

It will be up to Senate President Mike Miller and House Speaker Mike Busch to make the governor look good. They’ve done it before for other Democratic governors who submitted unrealistic proposals. They’ll find a way this time, too.

It’s likely that legislators will deconstruct O’Malley’s tax proposals and then rebuild them in more politically astute ways.

For instance, the phase-out of personal exemptions and itemized deductions might be revised so it only affects higher-income families, perhaps in the $250,000 and above range.

Similarly, the governor’s sales-tax-on-gasoline plan could be reshaped and reduced in scope to help Miller and Busch round up the votes for passage.

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