Lawmakers would have to consider tax hikes again next year
ANNAPOLIS -- Budget plans adopted by a House panel don't raise enough new revenue for Maryland, according to Senate President Thomas V. Mike Miller Jr., who said lawmakers would have to be ready to raise taxes again next year under the delegates' proposal.
House leaders scaled back the sweeping income taxes adopted by the Senate, which would raise tax rates for all residents earning at least $3,000, choosing instead to raise taxes only on residents earning at least $100,001.
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The House Ways and Means Committee also reduced tax exemptions for residents earning $100,000 or more in a budget plan that more closely resembles Gov. Martin O'Malley's proposal, which Senate leadership found lacking in their efforts to cut into Maryland's $1.1 billion structural deficit.
Unless a compromise is made and more taxes are put into state coffers, tax increases once again will be on the agenda in 2013, according to Miller, D-Calvert and Prince George's.
"If we adopt their plan, then we have to do the same thing again next year because it doesn't raise enough revenue to deal with the $1 billion deficit," the Senate president said Tuesday.
The $191.8 million in new revenue raised by the House's budget plan pales in comparison with the Senate's, which would collect $503.5 million from new levies in fiscal 2013.
Income tax increases alone would raise $475.8 million, more than triple the $140.1 million that delegates have proposed, according to the Department of Legislative Services.
The House budget may close the state's budget deficit this year, but it doesn't consider the long-term consequences of the state's weakening finances, according to Neil Bergsman, director of the Maryland Budget & Tax Policy Institute.
Delegates passed the more progressive tax plan, he said, but it leaves the door open for more taxes next year. Anything from income taxes to the sales tax -- an idea the governor briefly floated prior to the session, with little success -- could be on the table, Bergsman said.
"There's a pretty short menu of good options when you're talking about raising a couple hundred million dollars," he said. "They'll be looking at some of the same options they've been hearing this year."
Del. Sheila Hixson, D-Montgomery, said the Senate's income taxes were untenable for Marylanders, especially those earning less than $100,000 annually.
And the half-millionaire's tax, which would generate roughly $30 million by taxing the state's richest residents, "flies in the face of any tax policy, certainly in the state of Maryland and the United State, and frankly the world," she said. "Nobody does that."
Both the House and Senate budgets would raise the tax rate to 5.75 percent for residents earning more than $500,000, but the Senate plan requires taxpayers to pay that rate on all of the income, not just the income over $500,000.
"We think that we've done enough with cuts from the appropriations committee," said Hixson, chairwoman of the Ways and Means Committee. "And the tax package that we put out there is sufficient."