By Erich Wagner
Some lawmakers want to keep Maryland millionaires paying an extra income tax surcharge set to expire in December, but the idea has run into heavy bipartisan opposition in both the House and Senate.
A Senate bill filed this week would extend a 6.25 percent tax bracket for incomes above $1 million through 2014, and use the money to help the state fill in gaping budget holes. Another bill in the House would also continue the tax, but use the money to help pay down Maryland’s pension obligations for state workers and teachers.
Proponents see the proposals as a valuable revenue source, but opponents fear it will hinder job growth and drive wealthy residents out. The tax was set up in 2008 to replace an unpopular sales tax on computer services, but it is due to expire after this year.
“We’re going to keep our word,” said House Majority Leader Kumar Barve, D-Montgomery.
The tax was projected to raise $61 million during fiscal 2011 that begins in July, but it could raise more if extended into next year.
Sen. Verna Jones, D-Baltimore City, the Senate bill’s lead sponsor, said she thinks the extra revenue from the tax could be useful, given the state’s tough budget situation. She acknowledged the popular argument that excessive taxation is encouraging people to leave the state, but she said there was no data that conclusively proves that.
A report by Comptroller Peter Franchot’s office released in November found that the number of millionaires in the state dropped from 7,067 to 4,910 during the 2008 tax year, but much of that was due to declining income during the recession. The number of 2007 millionaires who did not file in the state for 2008 did go up slightly.
“I feel as though, given these times, we cannot afford to give up that type of revenue,” Jones said. “The reports about people leaving the state — not all of that is bogus — but it can’t be proven and there’s nothing definitive that there has been any type of negative impact.”
Sen. David Brinkley, R-Carroll and Frederick, called the bill a “stupid idea” that would hamper job growth at a critical juncture.
“It’s class warfare,” Brinkley said. “Especially in an economy where you’re trying to create jobs, you’re trying to throw [out] the individual who basically decides where they go.”
Senate bills introduced at this point in the legislative session are sent to the chamber’s Rules Committee for evaluation and assignment. Rules Chair Katherine Klausmeier, D-Baltimore County, said the bill should have enough time to be considered.