The full Senate will consider a multi-part tax reduction plan today, providing phased-in relief in multiple segments of the taxpayer spectrum. The amended version of SB 840 will include:
-an expansion of the Earned Income Tax Credit (targeting the working poor)
-a reduction in the state’s highest marginal individual income tax rates (targeting higher income earners)
-an increase of the personal exemption for middle class earners (targeting many taxpayers between those extremes)
Taxpayers with adjusted gross income over $100,000 would save 1-3% a year, the working poor making $50,000 would save about $375 a year through an Earned Income Tax Credit, and taxpayers in the middle would get higher personal exemptions, saving $16-20 per person.
“We thought if possible everybody should be included,” said Ed Kasemeyer, chair of the committee. But he said the committee needed to “be prudent on how much” to reduce taxes and “be cognizant of the future economy of the state.”
The county effects of the increased personal exemption have not been reliably calculated – but may reach $30 million per year by MACo’s rough estimation.
See previous Conduit Street coverage: When Do State Tax Changes Spill Over Into County Budgets?
In the House, only the beginnings of a tax plan have emerged. A different version of an Earned Income Tax Credit expansion is passing, as is a bill to lessen the interest charged on overdue taxes (which would deplete both state and local revenues). As always, the two chambers would need to reach an agreement on a specific proposal for it to become law.