Maryland residents face a bevy of potential tax increases in July, some of which would disproportionately hurt residents in Montgomery County.
Proposing to raise $311 million in new revenue — in an effort to fill a $1 billion budget gap — Gov. Martin O’Malley has proposed new taxes on tobacco and Internet sales, an increase in the state’s “flush” tax, and reductions on income tax deductions that he says would amount to about $191 more a year for a family of four earning at least $150,000.
He also plans to raise transportation-related taxes and fees to fill an $800 million hole in the state’s Transportation Trust Fund that the Democrat governor raided in the past to fill holes in other areas of the budget. Though he has not announced his specific plans, possibilities include a 15-cent-per-gallon gas tax increase that would rise 5 cents a year for three years, transit fare hikes and an increase in vehicle titling fees, all of which were recommended by a state panel.
| Tax time |
| How Gov. Martin O’Malley proposes to make up a $1.1 billion shortfall in the Maryland budget through taxes: |
| • $182 million by capping income tax deductions and phasing out exemptions for high-income earners, defined as individuals earning $100,000 and couples earning $150,000 |
| • $21 million by requiring online retailers to pay a Maryland sales tax for items sold to Maryland customers |
| • $19 million by aligning the tax on other tobacco products with the cigarette tax |
| • $20 million by closing tax loopholes for Maryland-mined coal |
| • He proposes to double the annual $30 “flush” tax to fund Chesapeake Bay cleanup efforts. |
| • He is widely expected to propose an increase in the gasoline tax when he announces his plan to fill the Transportation Trust Fund in the next several weeks. |
“The whole plan is just not acceptable,” said Montgomery County Executive Ike Leggett, pointing specifically to a plan to shift the cost of teacher pensions to the counties that could necessitate yet more tax increases for county residents. Leggett and County Council President Roger Berliner, D-Bethesda, met with state legislators in Annapolis on Friday to discuss the issues raised by O’Malley’s budget proposal.
The income tax changes, in particular, would have a disproportionate effect on Montgomery County residents and have officials concerned that they might drive away residents and businesses.
About 115,000 households in the county bring in more than $100,000, according to county Department of Finance Director Joe Beach, and about 30 percent of all Maryland residents earning more than $100,000 live in Montgomery County. Montgomery County’s 971,777 residents make up about 16 percent of the state’s population.
Rather than targeting the wealthy, O’Malley’s income tax increases would target the middle class, said Dan Hoffman, vice chairman of the Western Montgomery County Citizens Advisory Board, which represents residents of wealthy areas such as Bethesda, Chevy Chase and Potomac.
“He’s set the bar pretty low to capture as many folks in Montgomery County and Prince George’s County as possible,” he said.
