There are currently about three million seniors living in the state of Maryland and, of those, there are more than 850,000 over the age of 65. Each year, as the senior population loses members, new members join; those that were 64 last year become 65 this year. In two years those currently at 63 will join the club.
The senior club does at least one thing better than any other group; they vote. Accordingly, one must wonder why Governor Larry Hogan as well as the Maryland State Legislature have chosen to once again forget this rather considerable constituency when it comes time for some good old fashioned tax relief.
During the 2016 legislative session, you may recall, Governor Hogan put forward a bill to increase the tax exemption for seniors age 65 or older from $1000 to $5000 over a four year period. That bill did not receive any support from the majority and did not make it out of committee.
How, then, to give the issue traction for 2017? Obviously a new approach would be needed and that approach consisted of emphasizing the offset of any lost tax revenue from the senior tax break that would be generated by the increased spending the tax break afforded seniors and the resulting benefit to small business as well as the increase in sales tax revenue. End result: no legislation for tax relief for seniors for 2017.
The explanation provided for not reintroducing last year's senior tax relief bill focused on the budget and the shortfalls in both the 20178 and 2018 fiscal years. That completely ignored the sales tax offset as well as increased tax revenue from small businesses due to increased sales which would make any lost revenue due to this tax break, as Comptroller Peter Franchot indicated to me, “negligible”. Hypocrisy comes into play with the legislation put forward by the Senate Leader Mike Miller and Speaker of the House Mike Bush to provide a tax break for members of the military, hometown heroes and first responders.
Obviously, the issue is not whether these individuals are worthy of a tax break. The issue is the hypocrisy of saying there is not enough money to offer a tax break for seniors, many of whom are on a fixed income, for which there is an offset to cost but, yet, there is enough money, regardless of the budget shortfalls, to offer a tax break to any other group of people, no matter how deserving. Accordingly, I provide you with my testimony before the House Ways & Means Committee:
My name is Paul Schwartz and I am a member of the National Active and Retired Federal Employees, NARFE. I am a resident of Brookeville, Maryland and I am here today to testify AGAINST the Governor's bills to reduce the tax burden on our first responders and our military.
I am here to represent the senior population of Maryland that both Governor Hogan and the Maryland State legislature seem to continually forget.
We oppose these tax bills not because we find these groups undeserving. Rather, as I have been told for the last three years, although you would like to help out the needy seniors, the budget can't afford tax relief for our fixed income seniors who comprise more than 850,000 seniors over the age of 65. If the budget can't afford tax relief for seniors how, then, can it afford tax relief for any other group, as deserving as those groups may be?
Moreover, if you can't afford to give tax relief to seniors, for which there is an offset, I don't see how you can give tax relief to any other group for which there is no offset.
The State of Maryland currently faces shortfalls in revenue predictions for both fiscal year 2017 and 2018. Tax revenues for FY2017 are expected to be about $16.6 billion which is down some $365 million from initial projections. Likewise, tax revenues for FY2018 are expected to be about $17.2 billion which is down some $418 million from initial projections.
Again, this is not about first responders or the military. I am a former FEMA official and know first-hand the sacrifices our first responders make. This is about the budget and this is about hypocrisy.
As I mentioned quite extensively to many of you, seniors spend there money. Seniors do not save for the future because, for seniors, the future is now. Where do they spend that money?
Much of it at small businesses which stimulates the economy AND results in the collection by the state of sales tax revenue which offsets to a degree any lost tax revenue by a tax break for seniors. That is how so many other states like Pennsylvania do it.
Last year Delegate Mary Washington and State Senator Rich Madeleno pointed out that the extra few dollars in each senior's pocket would not amount to much. What they failed to take into consideration is that the extra $300 to $400 for each senior must be multiplied by the 850,000 seniors over the age of 65 to benefit the MD economy through the increased spending.
This year Senator Madaleno pointed out that a large portion of senior spending goes to food and medications for which there is no sales tax. True, but that is a set amount regardless of income and any new found money would not go to buying more medication or food.
There was concern by State Senator Manno and Delegate Luedke about the senior tax break benefiting the ultra-wealthy seniors of Maryland and we recommended that a cap be placed on income say about $250,000 so that the cap would not curtail the sales tax offset.
Now as many of you are aware I spoke to as many key players as I could to get this message across, including our Comptroller Peter Franchot who said, and I quote, “You have a winning argument” AND that even if the sales tax did not offset the tax revenue completely the difference would be “negligible”. I assume the State Comptroller knows something about the budget.
By the way, the fiscal note from last year inexplicably did not factor in the sales tax offset.
It seems the only person not to get the message was Governor Hogan and not for lack of trying as we met with Chris Shank, his legislative officer, for that very purpose. So where does that leave us regarding this legislation? If the budget can't afford to give a tax break to seniors, it can't afford to give a tax break to any other group. And let me close with this: legislators showing their faces at the United Seniors of Maryland Forum on January 25th will simply not cut it if they fail to support much needed tax relief for seniors. As we learned on November 8th, elections have consequences and so does lack of support for much needed senior legislation.
Again, let me emphasize that this is not about our first responders nor is it about our hometown heroes or our military or about the sacrifices they all make. This is about money, it is about hypocrisy, it is about politics, it is about needed tax relief for a key segment of our society but most of all it is about the senior population of Maryland being taken for granted by our elected officials in Annapolis - every single one of them.