As previously reported on Conduit Street, the Senate approved its budget plan last week and the House will be bringing its plan to the floor today and begin debating its plan tomorrow. Some of the major differences exist in the revenue plans. As reported by MarylandReporter.com:
Included in the Senate package is a plan to raise the state income tax across the board for almost every Marylander. An amendment adopted to the plan Wednesday night that adds to that increase for the state’s top earners dominated much of the debate.
The original bill,sponsored by Sen. Roger Manno, D-Montgomery, repeals a 1997 tax cut and raises the state income tax rates for anyone making more than $3,000 a year by .25%. However, a committee amendment adopted on Wednesday imposed what Sen. David Brinkley, R-Frederick, called a “half-millionaire’s tax” by further increasing the tax rate on anyone making more than $500,000 a year from a proposed 5.5% to 5.75%. The increase would affect around 19,000 households and net an additional $30 million in revenue designated for restoring old schools.
The House Ways and Means Committee on Monday approved its own tax package slashing many of the tax hikes approved by the Senate last week.
Voting along party lines, the committee approved 16-6 a tax proposal that would raise $190 million for state coffers — about half of the $415 million that would be raised by the Senate’s version.
The committee’s plan raises the income tax rate by .25% only for earned income over $100,000, rather than for anyone making $3,000 or more a year as the Senate had proposed. It also eliminates a controversial plan to tax all income for those making more than $500,000 a year at 5.75%.
- Increased income tax rates by .25% for those making more than $3,000 a year and imposed a “superbracket” for those making more than $500,000 a year
- Expanded the refundable earned income tax credit by 1% each year for the next 5 years from 25% to 30%
- Applied the sales and use tax to internet sales affiliates
- Grants to Aging Schools Program and additional transportation funding for municipalities
Below is a summary of actions included in both the House and Senate versions of the bill:
- Application of the recordation tax to an indemnity mortgage
- An increase in the maximum filing fee to appeal a decision by the Motor Vehicle Administration to the Office of Administrative Hearings
- Repeal of the corporate income tax credit for State and local property taxes paid on certain telecommunications property
- Repeal of the sales tax exemption for demurrage charges in the nature of a penalty for failure to return a gas cylinder within a designated time period
Below is a summary of actions modified or added by the House:
- Phase out of exemptions for those with incomes over $100,000 and eliminates exemptions from those with incomes over $150,000
- Application of the income tax to income derived from stock holdings in an Electing Small Business Trusts (MACo supported the closing of this tax “loophole”)
- Repeal of the sales tax exemption for out-of-state direct mail literature
- The Senate increased the tobacco tax rate from 15% to 20% of the wholesale price of other tobacco products, increased the tax rate for premium cigars to 20% of the wholesale price, and increased the tax rate for little cigars to 70% of the wholesale price. The House kept the tax rate on premium cigars at 15%, increased the tax rate on little cigars to 70%, and increased the tax rate on other tobacco products to 50%
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