Deepening County Concerns With Local Income Tax Case

An article in the Hagerstown Herald-Mail further highlights the effects of a recent county income tax case that is now sitting before the United States Supreme Court. At issue is whether the failure to allow a credit against the county income tax violates the commerce clause because it discriminates against interstate commerce. Should the Supreme Court not take up this case and the Maryland Court of Appeals decision stand, counties could be faced with refunding more than $190 million in income taxes, plus interest, for prior years and providing approximately $50 million a year in credits prospectively.

While the article focuses on the effects in Washington County, all counties would be affected, some at more significant levels than others. Officials across the state are grappling with how to handle the potential fiscal hit.

From the article:

Washington County Administrator Gregory Murray said that “if a problem exists, certainly there needs to be remuneration to the people impacted.”

“We also feel there should be some allowance for an extended period or help or support by the state if indeed the Supreme Court decides that remuneration should occur,” Murray said.

County Commissioner William McKinley said he felt that the state should step in to help the counties.

“I understand that the counties received this money, but this was because of a state law,” McKinley said. “We just have to wait and see what the Supreme Court says.”

Commissioner Ruth Anne Callaham said it was important to view any possible refunds to taxpayers “in the perspective of the entire budget.”

The Maryland Attorney General’s Office filed a petition in October with the United States Supreme Court requesting that it review the decision by the Maryland Court of Appeals in the case of Maryland State Comptroller of the Treasury v. Brian Wynne.

MACo has joined an amicus curiae brief prepared by the International Municipal Lawyers Association (IMLA) in support of the Attorney General’s petition.  Beside IMLA and MACo, other parties of interest who joined the brief include the National Association of Counties, United States Conference of Mayors, and the International City/County Management Association.

The Maryland Association of Counties, or MACo, is keeping a close eye on the case, said Andrea Mansfield, the legislative director for MACo.

“We are very concerned because it will have a big fiscal impact on the counties,” Mansfield said.

Additional coverage of this case can be found on Conduit Street.