Council passes plan to help homeowners hit by new tax plan
ROCKVILLE — Responding to the recently-passed Republican tax plan that could result in higher taxes for Maryland residents, the County Council on Tuesday introduced and passed a bill 7-1 that will allow residents to prepay their County taxes under the current tax laws.
“We must do what we can to protect our people from the negative impact of this terrible Republican tax legislation,” said Council member Roger Berliner (D-1), who originally proposed the idea of allowing residents to prepay their County taxes last week. “And this legislation before us is the only legislation that I am aware of that can postpone the pain for one more year.”
The Council returned from their holiday recess to act quickly on the bill, which County Executive Isiah Leggett (D) signed on Tuesday in the hope that it will mitigate some of the effects of the federal bill Council member Craig Rice (D-2) was the lone vote against the bill, while Council member Tom Hucker (D-5), abstained, as he was not present for the vote.
While Congress cut taxes when it voted on the Tax Cuts and Job Act of 2017 for the majority of Americans, it eliminated state and local tax deductions to $10,000 a useful tool from some residents in high tax jurisdictions like Montgomery County.
Now County residents can pay their local taxes early, in hopes they will still be able to use the old, more favorable deductions. The federal Internal Revenue Service will make the final call on all taxes and deductions for 2018, so there is no guarantee that residents can avoid negative impacts from the most recent tax bill according to County officials.
While it is uncertain what type of impact the federal bill will have on County residents, members of the County Council speculated that allowing residents to prepay their taxes that are due in spring of 2018 will serve as a one-year relief from a potential increase.
“It is not at all clear…the effect on our tax base” said Council member George Leventhal (D-at large).
Rice, was the only member of the County Council to vote against the bill, said he did so because the County’s wealthier residents are the main ones to benefit from the bill.
“Let’s just be real folks, who is this helping? And I want to be very clear; it’s helping the few of you in this room, but the reality is, guess who is really getting the benefit from this? Folks who aren’t in this room, folks who are already waiting ready to sign that check with their tax accountant in their multimillion-dollar homes,” Rice said.
Rice added that the County, which is in a budget shortfall, should not cut services while offering a break to wealthier residents.
The impromptu council meeting included a public hearing for the bill, which is required by County law, with several people testifying in favor of it saying the federal tax cut that removed deductions will raise their taxes.
“This tax bill is going to cause a considerable stress to our financial situation,” said County resident Paul White.
The Tuesday session did not seem like a reality last week.
On Dec. 19, Berliner wrote a letter to County Chief Administrative Officer Timothy Firestine asking him to allow residents to prepay property taxes, but County Executive Ike Leggett said he would not do it without legislation from the Council giving him the go-ahead.
Riemer, who is Council President, said last week that convening to vote on a bill to allow residents to prepay property taxes was not a possibility, but after many residents asked the Council to convene to pass the bill, Riemer said he and other Council members changed their minds.
The council hastily came together Tuesday morning as Berliner, the council member who originally proposed the idea, took a 5 a.m. flight from Florida to make the meeting, only to head back to the airport to return after it had already ended.
“My fingers were crossed, right up until the end. There was doubt, but I had to come and do what I could and make it happen,” Berliner said of the process to get the bill passed.
On Dec. 22 President Donald J. Trump signed the Tax Cuts and Job Act of 2017, which lowers the top tax rate from 39.6 percent to 37 percent and provides a tax cut for most Americans. While on average, an American household will see a $1,610 tax cut in 2018 according to the Tax Policy Center; the bill limits the deductions for state and local property, sales, and income taxes to $10,000.
While the County acted to allow residents pay early before the federal tax bill takes effect, Gov. Larry Hogan (R) announced last week he would introduce a bill to somehow offset the negative impacts of the federal bill on state residents. While Hogan did not disclose details of his bill, he said the state is likely to see more revenue as people will be paying more in taxes, which he said he wants to give back to the taxpayers.
“So I’m announcing today that our administration will be submitting legislation at the very beginning of the session next month that will protect Maryland taxpayers and mitigate any negative impact on the changes to state taxes,” Hogan said.