ANNAPOLIS — Maryland residents could end up paying no state income taxes under a plan proposed by one Republican candidate for governor.
Harford County Executive David R. Craig on Tuesday proposed reducing the state’s tax structure and state budget if he’s elected in November.
“This will be a big change for the state of Maryland,” said Craig.
Craig’s plan includes reducing income taxes in two phases in his first term.
The first would lower the income tax rate to 4.25 percent and increase the personal exemption from $3,200 to $4,500.
A second phase would lower the rate again, to 3 percent, and increase the exemption to $6,000.
At the same time, Craig said he would impose across-the-board reductions in the state budget.
Craig said the reductions would lead to more people moving to Maryland and would save entrepreneurs money to start or expand businesses in the state.
In the most surprising part of his announcement, Craig said he would reduce the state’s income tax to zero if he is elected to a second term and has proved that the initial two phases have resulted in increased economic activity.
Craig’s announcement came on the same day that Republicans in the House of Delegates were scheduled to testify on their proposal to reduce personal income tax rates by 10 percent, phased in over three years.
Del. Nicholaus R. Kipke, R-Anne Arundel, the House minority leader, said taxpayers are overtaxed and “will look for respite elsewhere.”
“So much is going right,” Kipke said. “But tax relief is needed to make it better.”
The bill is expected to have little chance of passing, even in an election year.
Gov. Martin J. O’Malley has been critical of tax cuts made more than a decade ago that he said lead to continued structural deficits in the state. He has also said in previous interviews that he would not consider tax cuts unless they were paid for within the budget.
House Republicans Tuesday said the reduction of taxes would bring more business and residents to the state and increase the flow of money into state coffers.
Del. Andrew A. Serafini, R-Washington, said the reductions would also help small businesses in Maryland, a majority of which pay the personal income tax rate.
“We’ve raised taxes, we’ve borrowed money and our economy still hasn’t recovered,” Serafini said.
When asked about Craig’s proposal compared to the House Republican bill, Serafini replied: “If you’re going to go big, go bold.”