ANNAPOLIS – Maryland residents earning more than $100,000 in taxable income would pay higher taxes under a $35.5 billion budget plan lawmakers easily passed Wednesday afternoon.
The General Assembly returned to Annapolis on Monday for a special session more than a month after it failed to approve a budget during the 90-day session. It took lawmakers only three days to pass a budget plan with income tax increases, increases in taxes for tobacco products other than cigarettes, and a shift of hundreds of millions of dollars in teacher pension costs to local jurisdictions over the next four years.
Forty percent of the money raised from the income tax hike would come from Montgomery County, where 23.3 percent of earners would pay more.
| Tax rates for single-filers | |||
| Taxable income | Current tax rate | Approved tax rate | |
| $1-$1,000 | 2.0% | 2.0% | |
| $1,001-$2,000 | 3.0% | 3.0% | |
| $2,001-$3,000 | 4.0% | 4.0% | |
| $3,001-$100,000 | 4.75% | 4.75% | |
| $100,001-$125,000 | 4.75% | 5.0% | |
| $125,001 | $150,000 | 4.75% | 5.25% |
| $150,001-$250,000 | 5.0% | 5.5% | |
| $250,001 – $500,000 | 5.0% / 5.25% | 5.75% | |
| $500,001 and up | 5.50% | 5.75% | |
Overall, nearly 14 percent of state residents would pay higher taxes, with 9.5 percent of Prince George’s County residents paying extra, according to a state fiscal analysis. The tax hikes would apply retroactively to January.
Tax rates would rise to as high as 5.75 percent for those earning more than $250,000 annually, and tax exemptions would be reduced for Marylanders earning more than $100,000. Residents earning more than $200,000 would see their exemptions eliminated entirely.
While some lamented the fact that lawmakers had to come back to Annapolis at all, Democratic leadership said the special session was needed to avoid more than $500 million in spending cuts — a contingency budget plan that took effect when lawmakers failed to complete their work on time in April.
“It would have been much more appropriate to have done it during the 90-day session, there’s no doubt about that,” said House Speaker Michael Busch, D-Anne Arundel. “But I think everyone felt responsible when we left here without a final product and we were governing by default. No one wanted to do that.”
A spokeswoman for Gov. Martin O’Malley said it is not clear when he will sign the budget bills.
The budget deal passed with a final vote by the House on Wednesday afternoon, restoring education funding that would have been cut and protecting the state’s good economic standing, O’Malley said.
“These have not been easy years, but what has held us in better stead than other states is that we’ve been applying a balanced approach to the budget, maintaining the AAA bond rating, but also protecting the investments that allow us to have a better rate of job growth than other states,” he said Wednesday.
But Republicans, and even some House Democrats, questioned the merits of raising income taxes during a recession, particularly on Maryland families.
“It’s amazing that the Democrats and Gov. O’Malley want to run around saying ‘mission accomplished’ when the only mission accomplished here was damage to the citizens of Maryland as far as jobs and as far as their quality of life,” said Senate Minority Leader E.J. Pipkin, R-Eastern Shore.
