ANNAPOLIS – Half of Montgomery County families would pay higher income taxes next year to help shore up a $1.1 billion shortfall that Gov. Martin O’Malley blames on the “Bush recession.”
The Democratic governor in his fiscal 2013 budget proposes raising $311 million in new revenue. Capping income tax deductions — such as mortgages and charitable deductions — and phasing out exemptions for residents with an adjusted gross income of at least $100,000 would bring in $182 million. An additional $21 million in the $15.3 billion budget would come from requiring online retailers, such as Amazon and eBay, to collect Maryland sales taxes. O’Malley also would double the state’s $30-a-year “flush tax.” He plans to announce ways to raise transportation revenue, including a potential increase in the gasoline tax, in the next several weeks.
A family of four making at least $150,000 would pay about $191 more annually in state income taxes, O’Malley estimated.
| O’Malley’s income tax proposal | ||||
| • Tax deductions | ||||
| Capped at 90 percent for incomes above $100,000 | ||||
| Capped at 80 percent for incomes above $200.000 | ||||
| • Tax exemptions | ||||
| Exemptions reduced from $2,400 to $1,200 per person for singles making between $100,000 and $125,000 and couples making between $150,000 to $175,000 | ||||
| Exemptions eliminated for singles making more than $125,000 and couples making more than $175,000 | ||||
| O’Malley’s budgets | ||||
| Year | Proposed budget | Projected shortfall | ||
| Fiscal 2013 | $15.3 billion | $1.1 billion | ||
| Fiscal 2012 | $14.6 billion | $1.4 billion | ||
| Fiscal 2011 | $13.1 billion | $2.0 billion | ||
| Fiscal 2010 | $14.4 billion | $1.9 billion | ||
In Montgomery County, where the median family income is $110,000, the tax changes would affect roughly half of all families and almost as many individuals. It would affect about one-third of Prince George’s County families and 20 percent across the state.
“This is the best budget that we’ve been able to submit in terms of its support and investment in job creation,” O’Malley said. He said his construction budget will support roughly 52,000 new jobs.
“We have recovered 43 percent of the jobs that we’ve lost in the Bush recession,” he said. Nationally, 28 percent of the country’s pre-recession jobs have been restored.
Republican lawmakers blasted O’Malley’s proposal, saying it redefines wealth in Maryland and “takes aim at the middle class.”
“Forget millionaires, this budget takes aim at thousandaires, phasing out income tax deductions such as mortgages and business expenses for those making even $100,000 per year,” said House Minority Leader Anthony O’Donnell, R-Calvert and St. Mary’s counties.
In what O’Malley called one of his most “controversial” proposals, he recommended shifting half of the state’s $946 million tab for teacher pension costs onto the counties.
To help ease the pain of the shift, the state would pick up half of teachers’ Social Security costs, which the counties pay for entirely.
