ANNAPOLIS – Maryland senators approved a budget plan by a 37-9 vote Thursday morning with nearly half a billion dollars in income tax increases for Marylanders, but with a more progressive twist than taxes proposed by Gov. Martin O’Malley, Democratic leaders said.
The Senate’s tax plan, which raises income tax rates to as high as 5.75 percent, passed as part of four budget-related bills that include plans to shift teacher pension costs to local jurisdictions and an Internet sales tax.
The income taxes were passed as part of a separate bill that garnered the most heated debate among lawmakers, but ultimately passed 26-20.
Senators were unhappy with Gov. Martin O’Malley’s proposal to cap income tax deductions for residents earning more than $100,000 annually, and instead elected to choose their own budget path.
“We told the governor to reduce [the deficit] in half, and the body didn’t like the way he chose to do it,” said Senate President Thomas V. Mike Miller Jr., D-Calvert and Prince George’s. “This is what we came up with, cuts and revenues.”
Had the budget plan not passed the Senate, contingency plans for roughly $750 million in cuts would have kicked in, with substantial cuts on education spending and Medicaid.
Republican senators said that while some of those cuts would have been acceptable, the state could have stomached others.
Sen. E.J. Pipkin, R-Eastern Shore, was particularly troubled by an amendment passed late Wednesday evening that raises income taxes on those making $500,000 up to 5.75 percent, which he called a jobs killer.
“It didn’t have to be this way. We could’ve accomplished what we needed to accomplish with the budget through spending cuts, without shifting the pensions, without increasing taxes,” Pipkin said. “And these taxes hurt the working families of Maryland.”
Other taxes added in the Senate budget include an online sales tax – though not a digital download tax – as well as higher taxes on some tobacco products and recordation taxes on indemnity mortgages.
