Thousands of IT firms, Web designers and computer whizzes are breathing easier after the Maryland General Assembly over the weekend repealed a sales tax it slapped on their work in November, replacing it with a new income tax on residents earning more than $1 million a year.
Legislation that will force about 6,500 millionaires to pay $17,000 a year more in state income tax to make up for the estimated $200 million gap the so-called tech tax was expected to generate is now headed to the governor?s desk. Members of the House of Delegates voted 93-44 on the bill, which also includes $50 million in cuts to transportation funding and requires the state?s Board of Public Works to identify an additional $50 million in cuts.
The vote came after intense debate in a rare Saturday-evening session just two days before today?s end of the 90-day session.
“It?s a thankless job being a legislator when there is a shortage,” said Majority Leader Kumar Barve. “No matter what we do, we will be criticized.”
Barve was one of one several Montgomery County Democrats to vote in favor of the bill ? which has the support of Gov. Martin O?Malley ? despite opposition from colleagues who said the “millionaires tax” disproportionately affects theirconstituents.
The measure creates a new tax bracket of 6.25 percent for personal earnings beyond $1 million, generating about $110 million a year.
Republicans largely voted against the measure, suggesting additional cuts or tapping into the state?s general fund balance ? reducing it by $114 million and leaving just under $100 million. Those alternatives failed.
“Taxes don?t just redistribute wealth, they redistribute people,” said Minority Whip Christopher Shank, of Washington County, during Saturday?s debate. “If we pass this, they have the option of relocating.”
