Montgomery business and elected leaders say they are worried Gov. Martin O’Malley’s suggested reforms to the state income tax structure would discourage businesses and residents from staying in the county.
O’Malley’s income tax plan lowers rates for everyone on the first $15,000 ofincome for singles and $22,500 for couples from 4.75 percent, which nearly all taxpayers now pay, to 4 percent. Income tax rates would shoot up, however, for singles earning $150,000 or more and couples earning $200,000 or more – they would be taxed at 6 percent. The plan says all income over $500,000 would be taxed at 6.5 percent.
But the plan would especially burden rich Montgomery County, officials said.
“We’re being asked to pick up 40 percent of the all the new income tax revenue being proposed by the governor,” state Sen. Rona E. Kramer, chairwoman of Montgomery’s Senate delegation, told The Examiner. “Only 19 cents of every dollar that Montgomery residents send to the state comes back to our county for programs here … We have tremendous need right here and we can’t afford the luxury to just pour it all out of our jurisdiction and still function as an outstanding county.”
Georgette Godwin, president and CEO of the Montgomery County Chamber of Commerce, said the proposed income tax changes could also harm small business owners.
“A person who owns a small business accounts for their business income on their personal income tax returns,” Godwin said. According to Godwin, this would easily put many small business owners into the new higher tax brackets. She feared the O’Malley proposal would discourage new businesses from setting up shop in the county.
“What would this do for us being competitive in a global marketplace?” Godwin said. “When we’re trying to attract top-notch companies from all over the world, they’re going to look at this tax policy at think twice about coming here.”
Kramer said she worried the income tax proposal would similarly send residents packing.
“The rest of the state needs to understand that if they make Montgomery County too expensive to live, there are very comfortable alternatives right across the river in Northern Virginia where they have excellent school systems and much lower taxes,” Kramer said. “We’ve never said we don’t want to help the rest of the state, but you can’t hit us so hard that we can no longer function appropriately and think we’ll remain the economic engine for the rest of the state.”
County Executive Ike Leggett did not return calls for comment.
