ANNAPOLIS — House and Senate Democrats vowed to save Maryland residents from the detrimental effects of the federal tax restructuring.
House Speaker Michael E. Busch and Senate President Thomas V. Mike Miller Jr. on Tuesday said a package of three bills would aim to return about $1 billion to residents who they say will be hurt by the changes. The announcement of the bills, which include a proposed expansion of personal exemptions at the state level and a decoupling of the estate tax from the federal rate, comes in advance of an expected report later this month from the Office of the Comptroller on the exact effects of the federal changes.
“We have 85 days to figure this out,” Busch said. “Clearly we’re waiting for the comptroller but we have to start right away.”
Hogan, speaking to reporters Tuesday afternoon, said Democrats, by virtue of their announcement, were joining him in agreeing something needed to be done.
“We’re thrilled that they’re talking about this,” Hogan said. “I had conversations with the president of the Senate and the speaker of the House as early as a week ago and they were saying ‘We need all that revenue.’ So the fact that they now agree with me, that were going to protect taxpayers and keep them from getting that tax increase, this is, well I could throw a party.”
The governor said lawmakers originally wanted the additional revenue for the budget but now agree with his plan.
But beyond an agreement that something should be done to protect state taxpayers, it is not clear what Democrats and Hogan agree on. When pressed for details of his plan, the governor deferred and said a bill may not be public until after Comptroller Peter Franchot releases details on how the federal tax changes will affect Marylanders.
The plan offered Tuesday comes even as Hogan, a first-term Republican, has promised his own as-yet-unreleased tax relief plan to help offset the effect on Maryland residents.
“I’m sure we’ll figure out ways to work the details out,” Hogan said.
Analysts project Maryland will be affected more than many other states by the federal tax restructuring, as it is considered a high-tax state. The new federal plan caps deductions for state and local taxes, such as the property tax, at $10,000. Before the change, those taxes were fully deductible by people who itemized their taxes.
The lion’s share of the effect, about $680 million, relates to changes in the personal exemptions.
Miller said the change results in “double-taxation on the people of Maryland.”
In addition to increasing personal exemptions, Democrats will also push for a bill that some estimate will save the state $60 million in lost revenue from an increase in the assets exempt from the federal estate tax.
Maryland has its own estate tax. It was recoupled with the federal exemption nearly four years ago and was expected to fully phase in the exemption to $5 million.
Changes at the federal level will more than double that figure, meaning Maryland residents with estates valued at $11.2 million or less would pay no Maryland or federal estate taxes.
Del. James J. “Jimmy” Tarlau, D-Prince George’s County and sponsor of the bill to decouple the tax exemption, said the federal change would cost Maryland coffers about $60 million and benefit the wealthiest Marylanders. The change would affect roughly 100 taxpayers annually, he added.
“If my daddy gave me an $11.2 million estate, most Marylanders and myself agree I wouldn’t mind paying some taxes on that,” said Tarlau.