Senate votes to increase state income tax as debate gets personal

March 15, 2012 at 11:50 pm

By Justin Snow
Justin@MarylandReporter.com

The Senate approved the state’s entire $35 billion budget package and reforms to maintenance of effort on Thursday as the spending plan cleared its first major hurdle before heading to the House of Delegates for further tweaking.

Included in the Senate package is a plan to raise the state income tax across the board for almost every Marylander. An amendment adopted to the plan Wednesday night that adds to that increase for the state’s top earners dominated much of the debate.

Sen. David Brinkley

Sen. David Brinkley

The original bill, sponsored by Sen. Roger Manno, D-Montgomery, repeals a 1997 tax cut and raises the state income tax rates for anyone making more than $3,000 a year by .25%. However, a committee amendment adopted on Wednesday imposed what Sen. David Brinkley, R-Frederick, called a “half-millionaire’s tax” by further increasing the tax rate on anyone making more than $500,000 a year from a proposed 5.5% to 5.75%. The increase would affect around 19,000 households and net an additional $30 million in revenue designated for restoring old schools.

Republicans argued that when adding local county taxes, those making more than $500,000 a year could be taxed at a combined rate totaling 8.95%, which would push job creators from the state.

High-earners pay $89,000 in income tax

According to figures from the comptroller’s office (p. 13), these 19,000 households with taxable income of over $500,000 pay an average of $89,000 in state and local income taxes now — $58,000 state, $31,000 local. About 4,000 of them make $1 million a year.

By comparison, these well-to-do taxpayers pay more in state and local income taxes than the 1.7 million Maryland taxpayers who have incomes of less than $60,000.

Senate Minority Leader E.J. Pipkin warned the chamber that they were “walking into a marketing nightmare” as news of the tax spreads. Pipkin said by creating the highest tax rate in the nation, Maryland would have a tough time attracting businesses and their owners to the state.

It was a sentiment echoed by Republican lawmakers and some Democrats as debate took an ugly turn.

Class warfare

Sen. Bobby Zirkin

Sen. Bobby Zirkin, D-Baltimore County, said he was “ashamed” of the adopted amendment. Invoking the Occupy Wall Street Movement, Zirkin said that the legislature should not target a specific class of people.

“There are reasons people are angry,” responded Sen. Paul Pinksy. “The 1% has grown out of touch.”

Defending the proposal, Pinsky argued that when public services are cut it is not the top 1% of income earners who are most affected. The Prince George’s County Democrat reminded lawmakers that the tax would only apply to income after federal deductions.

“Karl Marx would be proud,” Brinkley said in response to Pinsky’s comments. Brinkley’s comment drew moans from some in the chamber and a chiding from Senate President Mike Miller.

Sen Paul Pinsky

Sen. Paul Pinsky

Later in the session, Brinkley apologized for offending Pinsky, who said it was not the first time he had been “red baited,” but defended his remarks.

“When we get into a conversation about class warfare and some of the policies that are now being advocated here, that’s exactly what it smells like,” Brinkley said.

Tax on Internet sales

The income tax bill passed 26-20, with 8 Democrats voting against the measure. (Roll call tally board at bottom of story.) The Senate also approved the “Amazon tax,” which would levy the state’s sales tax against some online purchases, and a 70% tax increase on most cigars.

Also part of the Senate’s budget package was a bill reforming maintenance of effort, which ensures stable funding at the local level for public schools. The adopted bill closes several loopholes that some local governments have been accused of exploiting to avoid fully funding schools in their jurisdictions.

Speaking after the Senate adjourned, Miller said that while many Democratic lawmakers did not agree with the additional tax increase, they wanted to deal with the state’s $1 billion structural deficit.

“If you’ve made a success of your life, and you think money is success, we have an obligation to do our part for everyone,” Miller said.

Miller added that he thought comments about the Occupy Wall Street Movement were “ridiculous” and did not belong in the Senate debate.

The budget package now moves to the House, where the Appropriations Committee will make decisions on its version of the budget Friday.

Senate tally board on income tax increase.

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  • Yourkidingright

    Just who are the 26 that voted for this increase why aren’t their names published so we know at the polls this year who NOT to vote for. 

    • abby_adams

      Just look for the D behind their names, especially those from MoCo, PG & Balto City. What really interests me is what Democrats voted against this budget? Could these legislators actually be considering the potential hit ALL taxpayers will be taking with these hikes?

  • joe

     Apparently you thought all the thieves were in Maryland’s prisons!

  • abby_adams

    How quaint, Miller states the legislators wanted to deal with the $1B deficit. My question is who CREATED the ONGOING $1B deficit? This legislature under the direction of Miller,O’Malley & Busch, that’s WHO! They levied a 25% in sales taxes to eliminate the deficit. It didn’t happen because the legislature approved a budget last session with an 11%+ increase!  Now they want to levy a myriad of higher taxes & fees to fix the $!B deficit & we are expected to meekly go along with this schrade?  Shut up & pay up!

    I often wonder how Miller, O’Malley & Busch can continue to make these false statements without someone, anyone in the MSM in MD, calling them to account! Thanks, MD Reporter for helping to keep us informed.

    • Dale Mcnamee

       Regarding O’Malley, Miller, & Busch…They can get away with their lies because the MSM in Md. are on the same side ! My sources for knowing what’s going on in this state are Maryland Reporter & The Washington Times. TV news is useless. And the Baltimore Sun ?  Don’t make me laugh…

      They also get away because they keep on getting re-elected…

  • http://profile.yahoo.com/FWITEQLK7P32DTUSTDJMBJCH64 William Frank

    Any chance you can post the names of those Senators who voted for this hold up? I live in Baltimore City and plan to work hard to prevent the re-election of any legislator who is voting for higher taxes or fees, for any reason.  Please let us see their names.  Thanks.

  • meganpoinski

    The roll call will be posted online at the General Assembly’s website, but it is not up yet. It will be at this link: http://mlis.state.md.us/2012rs/billfile/SB0523.htm 

    The link goes to the status and summary of the bill, and floor votes eventually get posted at the bottom. It takes a bit of time for them to be put up because legislators have the opportunity to change their votes (in case the system wasn’t working properly or they made a mistake and pressed the wrong button), and the General Assembly wants to make sure the tally is correct before it goes online. I will post a direct link when it is available.

    –Megan Poinski, Associate Editor

  • OutOfBubbleGum

    If only back in the 60′s & 70′s, Maryland, as a state, could’ve spent money educating future senate members on addition and subtraction, we wouldn’t be in this mess.

  • Hutt2

    I will tell you what we are going to tweak… our idiot politians noses in november!!!!

  • Starrs

    we need to reverse this or no one who is successful in any way will want to live,work and raise their family in maryland– this is a very sad day. hopefully some one will vote this down and we can cut government spending or we have to target those that voted for this and get them out permanently and replace with fiscal commonsense. The arrogance of Miller is amazing — I have no responsibility to a government that has lost it’s bearing and is abusing it’s citizens as this current Omalley government is doing.

  • Milton

    Is it true what they say that increases in taxes in the “Free State” merely produce more Virginians, Carolinians, and Floridians, and never more revenue? Of course, that’s Economics 101

  • The Truth

    Yet all you hypocrites are crying when all your homeowner tax credits dry up. If you like to live in a cut-cut-cut state, please by all means move to VA. 

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