Montgomery elected leaders are asking members of Maryland’s congressional delegation to fix a tax glitch that could have some county residents facing increased federal taxes, in addition to potential statetax increases.
Montgomery County Executive Ike Leggett, Council President Marilyn Praisner and Council Vice President Mike Knapp sent Sens. Benjamin Cardin and Barbara Mikulski, and Reps. Roscoe Bartlett, Chris Van Hollen and Albert Wynn a letter requesting they work to modify the federal alternative minimum tax.
Knapp said the tax could be especially devastating this year because Gov. Martin O’Malley is proposing a 20 percent increase in the sales tax and increases in the income tax rate for residents earning more than $150,000.
“Everything would be piling up on the county at the same time,” Knapp said. “It would be hitting our residents very hard all at once at a time when the economy itself is not very strong.”
The AMT was created in 1969 to ensure that a few very wealthy people were not able to avoid paying taxes altogether because of tax exemptions and deductions they claimed. However, the tax has never been adjusted for inflation, though Congress has approved a “patch” in previous year in order to protect middle-income people the AMT was not intended to affect.
Robertson Williams, principal research associate at the Tax Policy Center said that 4 million people were subject to the AMT in 2006, and 25 million people could potentially be subject to it in the current tax year, if Congress fails to adjust it.
“The people it affects most are those with incomes in the high but not highest ranges,” Williams said. “We’re talking people earning between $75,000 and $500,000. There are examples of a married couple with a combined income of $75,000 and four children who could see their taxes nearly double.”
Leggett has lobbied in favor of the governor’s plan to make the income tax structure more progressive, but also said he was concerned about not raising the income tax rate so much that people choose to live in Virginia rather than Montgomery County.
PatrickLacefield, spokesman for the county executive, said he does not see a problem with supporting potential increases in state taxes and appealing to the federal government to “mitigate the impact” of a federal tax.
“They are two different things,” Lacefield said. “In terms of the federal tax issue it is a long overdue look. It is no longer serving the purposes it was intended to serve.”
