state taxes

Welcome to Maryland, one of the highest taxed states in the country. Only Connecticut receives less tax revenue from corporate taxes than does Maryland.

From whom then, does Maryland rely upon receiving the bulk of its tax revenue?

From you, that is who. And what has the Maryland legislature chosen to do over the last two years regarding your taxes in the aftermath of the passage of the federal tax plan? Impose a tax hike on you, that’s what!

What is a tax hike, you ask?

A tax hike, quite simply, is when YOU paid less tax last year than you do this year. That, my fellow Marylanders, is precisely what has occurred for many middle-class taxpayers as a result of the federal tax plan. What has your state government done to mitigate that impact over the last two years? Nothing, resulting in a tax hike for you and a windfall for the state coffers.

What then, was needed to be done to prevent this injustice to Maryland taxpayers? One of the more significant responses was the development and implementation of a formal plan, and that is exactly what National Active & Retired Federal Employees (NARFE)  attempted to do though, regrettably, with unsuccessful results…for this year, anyway.

The plan developed had to address the injustice of the federal tax legislation on the middle-class taxpayers of Maryland, tax legislation that served more like a campaign promise to the top one percent of income than an actual effort to relieve the tax burden on the middle class. The mitigation plan had to hold the collective feet of our state legislators to the fire for neglecting to address the injustice of the federal tax plan a full year earlier.

The first and most critical element of the plan was to establish a clear goal. That goal was to have our elected officials in the state legislature enact legislation that would allow itemized deductions on state returns even if the Maryland taxpayer chose the standard deduction on the federal return. This was a critical step in mitigating the impact of the federal plan on Maryland taxpayers since current law does not allow such decoupling and requires taking the minuscule state standard deduction if the now increased federal standard deduction is taken.

Last year, the state legislature chose not to address this needed fix using the excuse that it was “too soon” to assess the full impact of the federal tax plan.

A year of ignoring the issue did not seem to bring the state any closer to addressing the issue. The estimated impact on middle-class Maryland taxpayers who had ordinarily itemized deductions in the past was an average of around $1,000 additional state tax. Not something to be easily ignored.

The comptroller’s office estimates that the changes to the state personal income tax, as a result of the federal tax plan, will result in net additional state revenues of $403.9 million in fiscal 2019 and another $315.9 million in fiscal 2020.

That is not money in the Maryland budget. That is money that found its way into the Maryland coffers as an unintended consequence of the federal tax plan. That is tax money that would have been due to Maryland taxpayers if not for that federal tax plan. That is Maryland taxpayer money.

The next element of the mitigation plan, had to be to make sure that all state legislators were made aware of this injustice AND that Maryland middle-class taxpayers would not stand idly by as state legislators found new avenues to spend that windfall.

Accordingly, the State Legislation Committee of the Maryland Federation of NARFE actively pursued outreach efforts to meet with as many state legislators as possible to ensure that they were made aware of the injustice and that we expected them to support our efforts to correct that injustice. This included reaching out to both Democrats and Republicans to ensure that the issue was viewed as bi-partisan since it was clear that the solution needed to be bi-partisan if it was to have any expectation of success. The tax issue certainly was not a Republican issue or a Democrat issue; it was a taxpayer issue regardless of party affiliation.

A formal survey on the issue was widely distributed to all candidates running for the state legislature as a means of documenting their positions on the issue.

Even more important, the State Legislation Committee mobilized NARFE membership to raise their collective voices to ensure that state representatives understood the gravity of this issue and its importance to their constituents. The electronic tool developed for and provided to NARFE members to contact their state legislators was widely used and extremely useful. The word did, indeed, get out.

These collective efforts did succeed in seeing sponsorship of bills in both the House of Delegates and the State Senate to address the need to decouple the state return from the federal return. House Bill 327 and Senate Bill 906 are the direct results of the NARFE implementation plan, and SB 906 was a bi-partisan effort co-sponsored by Republican Senator Andrew Serafini and Montgomery County’s own Democrat Senator Brian Feldman.

Seeing these bills before the committee was no small feat. Last year, Republican Governor Larry Hogan submitted a bill to address this injustice and, in his words, “make us whole,” as did the Chair of the House Ways & Means Committee, Democrat Delegate Anne Kaiser. Neither chose to continue their commitment to “make us whole” by resubmitting bills during the 2019 legislative session. I guess it is difficult to let go of that windfall in the state coffers even though it falls on the financial backs of Maryland taxpayers. Wonder if the fact that it is not an election year had any bearing on their decisions.

Although it looks like neither HB 327 nor SB 906 will, like last year’s versions, make it out of either committee, not all is lost. Every year that the state legislature and the governor do not rectify this injustice is another year of a tax hike on us. The fight must, therefore, continue. By April 15, 2019, the number of disgruntled Maryland middle-class taxpayers will surely grow in numbers. As the numbers grow so, too, will the outcries for justice.

Every constituent must hold his or her respective state legislators and state officeholders accountable and require them to answer two simple questions: (1) Why did you support a tax hike on me by NOT fixing the injustice of the federal tax plan on middle-class Maryland taxpayers? (2) Why did you take the money and run without “owning up” to hiking my state taxes?

If enough constituents hold their elected officials’ feet to the fire, maybe the next tax year will see some tax fairness. It’s up to you!

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