Ninety-five percent of Maryland taxpayers will pay slightly lower income taxes under a “reform” of the rate structure Gov. Martin O?Malley proposed Wednesday to make it “a fairer, more progressive income tax.”
But singles making more than $185,000 and couples earning more than $250,000 would see their state taxes go up 26 percent ? thousands of dollars for the wealthiest 1 percent.
O?Malley began rolling out his deficit-reducing plan Wednesday in Towson at a discussion with Murdock Road residents. Combined with a penny sales tax increase he will officially propose today at a similar Ellicott City event, 83 percent of Marylanders will pay lower taxes, and 17 percent will pay more, the governor?s staff estimates.
O?Malley?s plan lowers rates for everyone on the first $15,000 of income for singles and $22,500 for couples from 4.75 percent to 4 percent. A new rate of 6 percent rate kicks in at $150,000 for singles and $200,000 for couples. A new 6.5 percent tax applies to all income over $500,000. The new rates will bring in $163 million more per year.
These numbers differ slightly from figures published in Wednesday?s Examiner, which were based on information from legislators O?Malley briefed. The governor?s staff refused to release the actual numbers or full details on Tuesday.
Combined with county piggyback income taxes, wealthy taxpayers in many jurisdictions will be paying close to 10 percent in state and local income taxes.
“If these individuals needed another incentive to declare Florida residency,” where there is no income tax, “this is it,” said Senate Republican Leader David Brinkley, a Frederick County financial planner. “They?re pushing out a very valued and valuable constituency.”
Smith told reporters the governor wants the tax rates “to happen now” so they go into effect in January for all of 2008. “There must be a special session of the General Assembly,” Smith said.
O?Malley said he?d like to see a special session by early November, though House Speaker Michael Busch has continued to resist the idea.
In preparing his tax plan, O?Malley has met only with Democratic legislative leaders over the last few months.
O?Malley called Brinkley Tuesday evening to give him a heads up about the tax plan. “He?s hoping that once we saw it that we could work on finding common ground,” the senator said. “This first part is not common ground.”
Republicans prefer spending cuts rather than increases to fix the deficit.
