News from MARYLAND TAXPAYERS ASSOCIATION, February 22, 2014
The political campaign season is picking up.
Republicans – There are 5 candidates now. Not all, however, have signed up officially with the State Board of Elections to run. February 27 is the deadline for all candidates running in the counties, and those running for the state legislature, as well as for statewide offices and Congress. U.S. Senate seats for Maryland are not up for election in 2014.
Larry Hogan, appointments secretary in the Ehrlich administration and small business owner, formally announced his candidacy in January. He is known for his newsy website and social media ChangeMaryland.com, which has publicized many tax and fiscal issues.
In late January, Charles Lollar, recently an active duty Marine Corps Major, also co-Chairman of the Maryland Taxpayers Association, announced his intention to eliminate the state personal income tax. While daring, there is no detail except that his website indicates a 5 year phase out. There are no specifics on the phase cuts themselves. The website alludes to the fact that eliminating the income tax cut would also apply to businesses. It is true that a huge percentage of small businesses pay their taxes through the personal income tax and it would definitely incentivize them to grow. Jobs would follow. He has released plenty of statistical information about the benefits of no income tax in other states. The benefits are significant in terms of economic growth.
This week, David Craig, Harford County Executive, announced his intention to take Maryland on a glide path to a zero state income tax that would lower the tax rates and increase the personal exemption in a first term and taking the final step in a second term. This was a fairly detailed implementation plan that would raise the personal exemption to $5000 while cutting the rate to 4.25% for all in the first phase. The second phase would reduce the rate to 3% across the board, resulting in substantial savings to taxpayers. The reduced rates alone in the first 2 phases would result in an average estimated benefit of singles keeping $750 more of their own money and married couples double that. One of Craig’s main intentions in raising the personal exemption was to increase the monetary benefit to lower income levels. This would give those with lower incomes the highest percentage increase in the amount of money they keep for themselves. As discussed above, the advantage is huge for all including a real stimulus business and jobs growth.
Doubts for accomplishment of these goals will nevertheless by raised by the press and the other party. States with no income tax have produced most of the new jobs since the recession began. Meanwhile, Maryland has accomplished little or nothing to improve employment and so much to hurt it by its high taxes, fees and unproductive spending.
Major tax cut programs, if any, have yet to be announced by the other Republican candidates: Hogan, Ron George and Brian Vaeth.
Ron George is a small businessman, a jeweler, who owns 2 stores in the Annapolis area and is also a two term delegate. By email and confirmed by phone Feb 22, he has pledged to cut personal income taxes by 10% in 2015 and get to a 3.5% flat tax by 2016 while removing deductions. Also, he would gradually reduce the corporate tax rate from 8.25% to 5%.
Brian Vaeth, of NuEra Energy, is a relative newcomer to elective politics. He appeared on a recent Fox-Baltimore TV debate.
Many of the Republican candidates insist that other recent taxes and fees need to be reduced or repealed such as death taxes, the new gas tax increase with annual COLAs, and the much maligned Rain Tax. These are a discussion for another day.
The only tax cut proposal heard from Democrat candidates to date has come from Doug Gansler, Maryland Attorney General. It is a corporate cut. He says the Maryland corporate tax would be competitive with Virginia if it were cut from 8.25% to 6.0%. He has also said that he would raise the level at which inheritances are taxed from $1 million to $5 million. Death taxes in Maryland come in two forms, estate and inheritance. Inheritance taxes generally refer to other than a direct inheritor. A direct inheritor would be a spouse or a child. Indirect inheritors would be more distant relatives, like nephew or niece, and also not a relative at all.
Neither of the following Democrats have favored a particular tax cut:
Anthony Brown, currently Lieutenant Governor, is running to move up to governor. He is noted most recently for being in charge of Maryland’s Affordable Health Care exchange.
Heather Mizeur is a State Delegate from Montgomery County.
Look for future reports on the campaign.