“What's that you say?”
“I can't hearrrrr youuuuu!”
That is, in essence, what our state legislators have said to taxpayers in the state of Maryland. Basically, their message is: I can't hear you, and even if I did, I don't really care!
As previously mentioned in this column, the recently-released federal tax plan hits the taxpayers of high-taxed states such as Maryland particularly hard. It is estimated that, as a result of the federal tax plan, Maryland taxpayers will see an increase of approximately $400 million in state taxes owed for the 2018 tax year.
What to do, what to do, what to do? Well, the state legislature has apparently decided to spend it and not return it to the taxpayers who, if nothing is done, will see an associated increase in their state tax bill come April 15, 2019.
Using the 2014 Personal Statistics of Income from the Comptroller's table for itemized deductions, the average increase in state and local returns for Marylanders with an adjusted gross income of $150,000 or less would average about $1000 in additional state tax per return.
Governor Larry Hogan submitted bills, Senate Bill 733 and House Bill 875, which effectively undid the damage of the federal tax plan. First, it allows Maryland taxpayers to itemize on their state return even if they choose the standard deduction, which has now been doubled, on their federal tax return. Current law does not permit that since itemization on the state return is currently directly tied to the federal schedule A.
More importantly, however, the bills also call for adding back many of the tax deductions such as state and local taxes and mortgage interest which were either eliminated or reduced under the new federal tax plan. A similar bill, House Bill 1336, was introduced by Delegate Anne Kaiser of District 14 who also serves as chair of the all-important, in terms of moving tax bills forward for a vote, House Ways & Means Committee.
None of these bills, essential to mitigate the impact of the federal tax plan on Maryland taxpayers, made it out of committee. Thank you Maryland State Legislature.
Of particular frustration is the bill sponsored by Delegate Kaiser or, rather, her reaction to the fact that even her own bill didn't make it out of her own committee. To quote her: “We thought it would be easy to tell who could be harmed [by the federal tax changes causing them to pay higher state and local income taxes]. No one knows the full impact [of the new federal law]. Why would we rush ahead?”
In other words she, obviously, didn't even support her own bill. This, in spite of the findings of the Comptroller's Office which clearly stated the impact of the federal tax plan on Maryland taxpayers, especially those with an income of $150,000 or less. As a matter of fact, Delegate Kaiser's bill limited the benefits to $225,000 of income for joint filings and $150,000 for single filers, indicating she had an understanding of the impact.
Apparently not enough.
It is also quite disturbing that during my testimony before that same House Ways & Means Committee in support of both bills, it was quite clear that several of the members of that committee had no understanding of the full nature of the bills before them. It was clear that several of these members did not realize that the bills were designed to add back what had already been there in terms of deductions and not add any additional deductions that would impact the Maryland budget. In other words, I had to explain that there was no impact on the existing budget by simply adding back deductions that had been allowed prior to the federal tax plan going into effect.
This experience provided a quite disturbing perspective on how little importance the members of the House Ways & Means Committee placed on the tax burden currently shouldered by Maryland taxpayers and how little they cared about addressing it. Oh, and by the way, these bills aren't several pages long; they are a page and a half with the relevant portion running about a half page. Even our president should be able to read that.
What to do, what to do? How about this? Try to recall how the members of the Maryland State Legislature compounded the financial hit the federal tax plan placed on Maryland taxpayers and, instead, decided to fill the Maryland coffers on the backs of Maryland voters come this Election Day of Nov. 6, 2018. I know I will!
If you feel so inclined to let your state legislator know where you stand on the need to address this issue you can call the General Assembly toll-free number at 1-800-492-7122 and ask to be connected to your legislator’s office. You can also email the legislator. To get a list of state legislators and their email addresses go to the Maryland General Assembly webpage: http://mgaleg.maryland.gov/webmga/frmmain.aspx?pid=legisrpage&tab=subject6.
As I stated during my testimony before both the House Ways & Means Committee and the Senate Budget & Taxation Committee: “This is not a Republican issue, nor is it a Democrat issue. This is a Maryland taxpayer issue” and, as well, a math issue: If you deduct less, you pay more. We relied on our elected officials to do the math and address the issue. They chose not to even though the solution was staring them in the face: HB875 and SB733.