The massive tax package pushed through the Maryland legislature this week may not hit wealthy Montgomery County as hard as the original version proposed by Gov. Martin O’Malley would have — but that doesn’t mean it was greeted as good news by all.
Sen. Rona Kramer, leader of Montgomery County’s senate delegation, said she didn’t vote for the income tax changes and didn’t buy that the package was good for the county.
“This was not in our county’s best interest,” Kramer said. “We could be talking about two teachers, an accountant or a firefighter in Montgomery County — those are the people who will be hit by these tax increases. People already struggling to own a home, earn a living, pay for child care and set aside money for their children’s college education and now the state wants to take more of their money in taxes.”
Local leaders gave mixed reviews to the final tax plan approved early Monday by the state legislature, which will raise income taxes for many affluent Montgomery residents, but not to the extent sought by the governor.
Facing a roughly $1.7 billion budget deficit, O’Malley proposed raising the income tax rate from 4.75 percent to 6.5 percent for all residents making more than $500,000, and to 5.5 percent for people earning more than $150,000. The legislature approved a plan that would set the highest bracket at 5.5 percent and tax those making more than $150,000 at 5.25 percent, after some Montgomery legislators and County Executive Ike Leggett said the extent of O’Malley’s increases would “harm the economic engine of the state.”
Montgomery Del. Kumar Barve, also the House’s majority leader, said the final package was “a good deal for Montgomery County.”
“We held the income tax rate at 5.5 percent for incomes over $500,000, which is very good for Montgomery County vis-a-vis Northern Virginia,” Barve said. “High-tech and startup businesses are not going to feel any pressure to do anything other than stay in Montgomery County.”
Montgomery County Council Vice President Mike Knapp was more concerned about the prospect of future increases than the impact of the modified version of O’Malley’s plan.
“Surely this is progress over where we started and I appreciate the legislature’s efforts in that regard,” Knapp said, “but we still need to be mindful of the potential upward pressure.”
Montgomery County Chamber of Commerce President and CEO Georgette Godwin said the true effect can’t be known.
“It remains to be seen if we solved the problem without hurting our competitiveness,” Godwin said.
Overall, the income tax increases raise $197 million, largely from Montgomery County taxpayers.
