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Posted at 7:26 PM ET, 03/10/2011

Return of the Maryland millionaire's tax?

By Aaron Davis


Add the millionaire's tax back into the mix of Maryland's budget battle.

A bill that would permanently return the state's top-tier tax bracket to 6.25 percent received a hearing Thursday in front of the House Ways and Means Committee. The tax increase was one of several signed into law by Gov. Martin O'Malley (D) early in his first term to close ongoing budget shortfalls, but the provision expired last year.

Millionaires "get a pass this year, but hopefully we can do something about it next year," said author of the bill, Del. Jolene Ivey (D-Prince Georges).

Ivey introduced the same legislation last year, but it died in committee in the run up to the election. This year a similar proposal is working its way through the state Senate as part of a sweeping package of $827 million in potential state tax increases. More than a dozen other separate pieces of legislation would increase taxes on gas, alcohol, cigarettes and corporations.

On the campaign trail last fall, O'Malley promised to introduce a budget this year that relied on no taxes. He did so, but left the door open to approving tax increases if legislature did so.

With only a few weeks remaining before state lawmakers must begin making final decisions on how to close a $1.6-billion shortfall, dozens of tax bills remain in play.

State budget analysts predicted the millionaires tax would bring in about $75 million annually from Maryland's top 7,000 earners. The state's top tax bracket is 5.5 percent for anyone making over $500,000.

Republican critics of the legislation charged that it would unduly burden small business owners who may report over a million dollars in annual earnings, but actually make a much smaller profit.

"You may report income of $1 million, but you forget the costs involved. Your profit might only be $50,000," said Del. Kathryn Afzali, (R-Frederick).

Both Republican and some moderate Democratic lawmakers said they were alsoconcerned about conflicting reports that the state's last millionaires tax prompted wealthy residents to switch their residency to other states or leave Maryland altogether.

But representatives for the state's largest public employees' union, nonprofits and the needy argued that a millionaires' tax amounted to making Maryland's richest pay their fair share.

Advocates cited studies that with county and local taxes added on, most state residents pay about 10 percent of their income in Maryland taxes, but millionaires pay about 7 percent.

By Aaron Davis  | March 10, 2011; 7:26 PM ET
 
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Comments

Sadly, this was inevitable. Virginia, you'd better make sure you've got the computers at your DMVs up & running because it looks like you're getting a slew of new residents.

Posted by: Gus_Baker | March 10, 2011 11:35 PM | Report abuse

These Maryland politicians need to stop playing these games with everyday, hardworking people in this state paying “more than their fair share of the taxes in this state.” Stop trying to run that nonsense about these rich businessmen and their profit margins – that is what they have accountants and tax attorneys who figure out how they can avoid paying their fair share and usually do find ways to do so, no matter what their official tax rate may be. Let the rich leave, if they must – who cares, others will come in their place and other people who are going to pay more taxes anyway, instead of being subsidized by everyday, laborers in this state!!! We all are aware that these politicians wanted those campaign contributions and support in the upcoming elections last year and were not about to vote for tax increases on their benefactors – and may not vote for it this year or next either. But these game playing politicos need to understand that, like in Wisconsin, the voting population of this state is going to “clean house,” unless they make sure that the 7,000 richest millionaires pay their fair share of taxes. The majority of Maryland’s taxpayers are fed up shouldering the bulk of this state’s tax burden. GAME OVER, O’Malley and Annapolis politicos.

Posted by: hotezzy | March 11, 2011 12:34 AM | Report abuse

Brilliant idea of Maryland law breakers improving Virginia economy.
More $$$ for accountants and tax attorneys and more millionaires for Virginia.

Posted by: optimist_10 | March 11, 2011 9:42 AM | Report abuse

I make $37,000 a year and I pay 12% of my income to taxes and someone who makes $500,000 pays 5.5% and even though their revenue might be over $1,000,000.00 they want to say that overhead and payroll for people their paying $10.00 and hour may leave them with $50,000 a year. Your still paying less then me. I could live better with 5.5%, but lets be real, the taxe loopholes and your own funnny book keeping keeps you being the liar that you are. If you can't keep your business going sell it or close it, but stop living off of other people. The upper middle class always wants to say they dont want to pay for the needs of someone else, but the vast majority pay for your the decreases in your taxes. I just wish I could be there when GOD makes his final judgement. Maybe if more people saw that, they would live their lives in a different way.

Posted by: bobby31 | March 11, 2011 10:06 AM | Report abuse

Raising taxes is never the answer. Cutting pork and fat should be done first. For instance take away the perks of luxury SUVs that we see many of the DC area officials riding around in. Those things should be the first to go.

Posted by: jab00 | March 11, 2011 12:10 PM | Report abuse

I say raise their taxes even more.

If they don't like it, they can move to some other country where they already are probably sheltering most of their income from American taxes.

Oh, and have them take their illegal alien Nannies and Gardeners too.


Posted by: MarilynManson | March 11, 2011 12:27 PM | Report abuse

Or they'll just move to Virginia. That's the way it works.

Posted by: Trout1 | March 11, 2011 3:05 PM | Report abuse

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