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Where Brown, Hogan stand on taxes

If it comes out of your wallet it’s a tax, and the two major candidates for governor are keenly aware that pocketbook issues are of keen interest to voters.

After an early focus on social issues, Democratic Lt. Gov. Anthony G. Brown has joined Republican Larry Hogan in a stretch-run debate on those concerns.

In the last three weeks, polls released by three different organizations have reported that Marylanders, and women in particular, are expressing concerns about the state economy and taxes.

Taxes

(The Daily Record/Maximilian Franz)

“Clearly this election is all about the economy,” said Mileah Kromer, director of Sarah T. Hughes Field Politics Center at Goucher College.

A poll conducted by the college earlier this month reported that nearly 72 percent of people surveyed believed they were in the same financial situation or worse off than they were just a year ago.

From rolling back some or all of the 40 taxes raised under Gov. Martin J. O’Malley to blue-ribbon tax commissions and no-new-tax pledges, both Brown and Hogan are making promises that would allow businesses and residents to keep more of their hard-earned dollars.

Here is where the candidates stand on taxes in Maryland based on interviews with Hogan and in the case of Brown, who did not respond to requests for interviews, statements made in previous interviews, debates and other public appearances.

For nearly three years, Hogan has run on the issue of high taxes in the state both through his Change Maryland organization, which recently has morphed into his political campaign.

“We need to roll back as many of these 40 tax increases as we can,” Hogan said.

But the details of those roll backs — which taxes, how much, and when — remain unclear.

One unpopular tax that may not change under Hogan is the state gas tax.

Last year, the General Assembly General Assembly passed a phased-in, 20-cent increase on the state gas tax — the first such increase in 20 years — as well as annual automatic increases in the tax to keep pace with inflation.

In an interview last week, Hogan said the backlog of roads projects around the state makes it difficult to cut the tax.

“The only way we’re going to get any of this fixed is with the revenue that will come in,” Hogan said.

One reduction Hogan has said he does favor is a reduction in the state corporate tax. Currently, the rate stands at 8.25 percent and a number of Republicans have pointed to Virginia’s 6 percent corporate rate as an impediment to retaining companies in Maryland and luring more to the state.

Hogan has not specified how much he would seek to cut the tax, which would ultimately require the approval of the Democratic-controlled General Assembly.

Earlier this year, Sen. Richard Colburn, R-Eastern Shore, proposed reducing the state corporate tax to match Virginia’s over a period of five years.

Brown has criticized Hogan’s call to reduce the corporate tax rate as a “$300 million giveaway to the smallest groups of the largest corporations.” The figure Brown cites tracks with the $336 million in reduced revenue projected in a legislative analysis of Colburn’s bill.

Brown has defended the tax increases enacted in the last eight years as necessary.

“Marylanders did their part to protect our schools, safe neighborhoods and the environment all so we could ensure that we have a vibrant economy and communities to attract families and businesses to Maryland,” Brown said during an October 7 debate.

Brown said he agrees with the need for finding ways to lessen the tax burden for middle-class residents in the form of targeted tax breaks for small businesses.

A number of Democrats in the last year have suggested that there may be room for such relief in changing the rates that affect those businesses, most of which are registered as Chapter S corporations and pay the same tax rates as individuals.

Additionally, Brown has proposed the appointment of a commission to make recommendations on changing the tax structure.

“Our tax code should reflect our values, including a commitment to providing relief for working and middle-class families; encouraging employers to create jobs in Maryland; and protecting our investments in education, safety, the environment, and health care,” Brown writes in a campaign proposal.

Brown said that commission would be created within the first 100 days of his administration and make recommendations for legislation in time for the 2016 General Assembly session.

Brown has also gone so far as to promise that he will not raise taxes.

“Let me be clear, I don’t see the need, nor as governor will I raise taxes in a Brown-Ulman administration,” said Brown, a declaration he made in two separate debates with Hogan earlier this month.

The promise could paint Brown into a corner when it comes to taxes increases he’d like to support, such as the tax on tobacco, and taxes that may need to be increased, such as the state property tax that is used to cover state bonds.

A growing reliance on borrowing is creating a widening gap in what the property tax can cover. The next governor will likely have to find a way to cover an expected budget deficit along with a projected $371 million in debt service.

Without a property tax increase or without cuts in state programs, the money to cover the shortage would come from the state general fund. That potential shortfall is projected to grow to $436 million in fiscal 2017, $493 million in fiscal 2018 and $519 million in fiscal 2019, according to a report this year from the Maryland treasurer.