The legislation, introduced Monday by Gov. Martin O'Malley and backed by the Democratic leaders of the House and Senate, would subject top-earning Marylanders to the seventh-highest income tax rate in the country, according to the National Tax Foundation. Their rate now ranks 10th.
Meeting in special session, the state Senate passed the legislation Tuesday, and Speaker Michael E. Busch said he believes he will have the 71 votes needed to approve the measure in the House.
Passage would wipe out the so-called Doomsday budget and clear the political thicket Democrats wandered into when they failed to enact a spending plan last month at the end of the regular legislative session.
The revenue plan would raise tax rates for individuals making more than $100,000 a year and for joint filers who earn more than $150,000. It hits suburban communities hardest, with 75 percent of the burden falling on taxpayers in Anne Arundel, Baltimore, Howard and Montgomery counties.
"This exercise is about making sure we maintain funding for things that matter to us," said House Democratic Leader Kumar P. Barve. Speaking Tuesday on the House floor, the Montgomery County lawmaker told colleagues that his own taxes would go up about $9 a week.
"That is a price that I'm willing to pay," Barve said.
Republicans fought back all day — but with little impact.
"We are raising spending, we are raising taxes and we don't need to," House Republican Leader Anthony J. O'Donnell thundered. But a series of GOP amendments were easily defeated by the Democratic majority.
GOP lawmakers, who were fine with the cuts in the Doomsday budget, warned that the changes would hamper the state's fragile economic recovery.
Specifically, they said, the tax increases would hurt firms organized as S corporations, usually small businesses that pay individual rates instead of corporate taxes.
O'Malley, a Democrat, had avoided making any changes to the state's income tax rates during the regular session. His budget proposal would have phased out exemptions and deductions for higher earners.
Most members of the House and Senate wanted to raise the rates but could not finish their budget by the April 9 deadline.
In Baltimore, taxpayers who earn more than $100,000 and couples who earn more than $150,000 would see an average increase of $602. In Baltimore County, the average increase would be $758; in Howard, it would be $575.
The General Assembly also moved forward on a measure that would shift some of the costs of teacher pensions to local governments. That item cleared the Senate on Tuesday and moved to the House, where a final vote is expected Wednesday morning.
In the House, the tax package faced challenges from both the left and the right Tuesday afternoon.
A handful of Democrats from Montgomery County wanted the state to raise the state's sales tax by a penny on the dollar instead of changing income taxes. Pushed by Del. Charles E. Barkley of Montgomery County, that proposal would have raised at least $700 million in revenue, reducing the chances that the Assembly would be asked to increase taxes again.
"People are not going to be happy with you anyway" for raising taxes, Barkley warned. "We ought to do the right amount of taxes so we can address other needs."
His idea failed to gain traction and was defeated on a voice vote.
GOP lawmakers objected to any rise in taxes. Del. Wade Kach, a Baltimore County Republican, offered an amendment that would have gutted the income tax increases.
"Tax increases are not the answer," he said. "They are not what is going to solve the problems in the state of Maryland."
Earlier in the day, the Senate passed both the income tax increase and the teacher pension shift.
The vote on the tax measure was 27-19 as seven Democrats joined the chamber's 12 Republicans in voting no. The vote on the teacher pension shift was 33-13, with 11 Republicans and two Democrats opposing the bill.
The Senate action took place after a vigorous but civil debate during which Republican senators decried O'Malley's record of raising taxes and fees during his six years in office.
Senate Minority Leader E.J. Pipkin, an Upper Shore Republican, said the tax increases nearing approval would push the amount by which Marylanders' annual tax burden has grown under O'Malley past $2 billion.
Republican senators decided not to mount a filibuster, so Senate President Thomas V. Mike Miller was not forced to round up the 29 votes required to cut off debate.
Pipkin said a filibuster would not have had much effect in a special session, because there are no bills waiting in line behind the measure on the floor.
Some of the most forceful debate in support of the measure came from Sen. Bill Ferguson, a freshman Democrat from Baltimore who rose from his seat in the back of the chamber to read letters from students in one sixth-grade public school class. Each child described how he or she had been affected by a shooting or other act of violence.
"Nobody likes to raise taxes," Ferguson said. "But if we can improve these students' lives, these innocent children's lives, it is worth it."
Before the special session opened Monday, the Department of Legislative Services estimated that it could cost taxpayers more than $20,000 a day. But this week's session, which is expected to conclude Wednesday, could end up costing less because many members have chosen to drive home at night instead of charging the state to stay in hotels in Annapolis.
The income tax component of the $264 million tax package would spare about 86 percent of Marylanders. The 14 percent who make more than $100,000 as individuals or more than $150,000 as couples would pay from one-quarter to three-quarters of a percentage point more and also lose some of the value of their personal exemptions.
The top rate in Maryland, including local piggy-back taxes, would be 8.95 percent, which would tie Vermont and the District of Columbia for seventh-highest nationwide. Hawaii has the highest state income tax rate at 11 percent.
The package also would raise taxes on small cigars and chewable tobacco to a level comparable to the tax on cigarettes. Premium cigars would not be affected.
It also would double the fee for a first copy of a death certificate from $12 to $24. Subsequent copies would remain $12. And drivers who want to appeal a Motor Vehicle Administration decision to suspend or revoke a license would have to pay a filing fee of $150 — an increase from $125.
Under a compromise struck by the House and Senate, the shift of teacher pension costs to the counties would be phased in over four years. The cost to the jurisdictions would be partly offset by an increase in local income taxes as a result of the phase-out of personal exemptions.
O'Malley called the special session after the Assembly became mired in disputes over the budget and gambling and ended its regular session after passing a budget, but not two companion measures.
The result was a series of automatic spending cuts — described by Democrats as the Doomsday budget — that would have affected education, law enforcement and other Democratic priorities.
Republicans pointed out that even with the cuts, the Doomsday plan — which they called a "live within your means" budget — included $700 million more in spending that the current budget.
Pipkin offered an amendment that would have held spending to current levels. It was soundly rejected.
"I think it's a sad day for the state of Maryland," Pipkin said.