The Comptroller’s Office has released its report on the November distribution of the local income tax. The November distribution of county income tax revenues – which includes a substantial year-end “reconciliation” amount and are therefore very volatile – are 8.9 percent higher than last year, totaling $1.394 billion.
The November distribution reflects tax year 2016 third quarter withholding and estimated payments (and late second quarter withholding) ($1.022 billion), and the fourth reconciling distribution for tax year 2015 ($371.4 million).
James Pasko, CPA, Manager of Revenue Accounting for the Comptroller of Maryland, details the report:
Table 1 shows the forth reconciling distribution, which totals $371.4 million. This distribution accounts for the returns filed through the October filing extension; these returns typically show disproportionately high levels of income. As is typical with reconciling distributions, growth varies widely across the counties.
Table 2 shows the new Local Tax Percentage. The percentage for the counties, and cities and towns was recalculated in November as tax year 2015 is now complete. The Local Tax Percentage has been reduced in part by the ruling in the Wynne case, which is why the amount of tax going to localities increased by less than total receipts. The third quarterly distribution grew 4.6% to $1.0 billion. Withholding growth of 7.3% is welcome but due in part to calendar issues rather than fully attributable to increasing wage earnings.
Table 4 shows cumulative Local Income Tax distributions through November. Cumulatively, distributions increased 5.7% to 4.5 billion compared to this point last year.
Table 5 shows that the cumulative amount of tax returns processed through November 1st of this year have increased 1.8%, to 2.8 billion, compared to this point last year. This fact helps explain why third quarter receipts are up this year. The increase in tax returns processed, and other timing issues, have essentially pulled the collection of money forward in this year.