Montgomery County lawmakers are proposing alternatives to Gov. Martin O’Malley’s plan to raise taxes for the state’s wealthiest residents, many of whom live in the county.
Several legislators introduced bills last week proposing income tax increases that are lower than those being floated by O’Malley to help combat the state’s $1.7 billion deficit.
O’Malley wants to raise the income tax from 4.75 percent to 6 percent for residents earning more than $150,000 and to 6.5 percent for people earning more than $500,000. Montgomery County residents would pay 80 percent of the increased revenue, according to data from the state comptroller’s office.
The rate for residents in lower tax brackets would be dropped to 4 percent under O’Malley’s plan.
Sen. Jennie Forehand, D-Rockville/Gaithersburg, introduced two bills last week that would raise taxes to more than 5 percent — the level they were at before a 1997 tax cut. One of the bills also would lower the personal exemption from $2,400 to $2,000. It was raised in 1997 from $1,200.
“I put these in as a compromise,” Forehand said. “I thought that the governor’s proposal, when you add the piggyback from the counties, would have put us in a noncompetitive position with some of the brilliant people we’re trying to attract to the state.”
The state’s $1.7 billion deficit is the result of a $1.5 billion increase in education funding passed by the legislature in 2002, combined with a 1997 decision to cut income taxes from 5 percent to the current rate of 4.75 percent, Forehand said.
“In the same time period as [the education bill], we gave the citizens a 10 percent cut in the income tax, and we spread it over five years — people never knew that they got it,” Forehand said. “We’ve known for five years that this would be the year that we would have to do something about it.”
Del. Luiz Simmons, D-Rockville/Gaithersburg, introduced a bill that also would restore the income tax to 5 percent. His bill would lower the personal exemption from $2,400 to $1,200 for those who make between $100,000 and $200,000 and eliminate it for those who make more than that.
Del. Sheila Hixson, a Silver Spring Democrat who is chairwoman of the House Ways and Means Committee, floated a bill that would maintain the current 4.75 percent tax rate for most residents and raise it to 6 percent for those making more than $150,000. Unlike O’Malley’s plan, her bill would not raise the tax an additional 0.5 percent for people earning more than $500,000.
County lawmakers have introduced other bills as well to shore up the deficit, from adding sales taxes to 31 services, to increasing the alcohol tax, to adding taxes on corporations.
