Deal may end 'tech tax'

Gov. Martin O'Malley and top leaders in the General Assembly are lining up votes for a plan to replace Maryland's new computer services tax with an income tax surcharge on top earners and cuts to transportation and other spending.

The plan has the backing of Senate President Thomas V. Mike Miller and Sen. Ulysses Currie, the Prince George's County Democrat who chairs the powerful Budget and Taxation Committee.

"I feel fairly certain we'll be able to get it out" of committee, Currie said yesterday. "Eighty to 90 percent of the legislature feels we have to repeal the computer tax."

The so-called "tech tax" was approved in November's special legislative session; business groups have called for its repeal almost from the moment it passed, saying it will destroy a growing part of Maryland's economy.

O'Malley, a Democrat, discussed ways to repeal the $200 million levy in a closed-door meeting with legislative leaders Tuesday night. The consensus that emerged was to try to raise $100 million by creating a new income tax bracket of 6.25 percent for people earning more than $1 million, according to those who attended the meeting.

An additional $50 million would come from the state's $400 million Transportation Trust Fund, and the rest from additional budget cuts.

Montgomery County Executive Isiah Leggett, whose objection to tax hikes on top earners galvanized opposition from his county's lawmakers during November's special legislative session, indicated yesterday that he was open to higher income taxes as part of a comprehensive package.

If a high-earner's income tax hike is "a piece of the overall package, that might work," Leggett said yesterday.

O'Malley's proposal still faces tough opposition from the Montgomery County delegation, the state's largest voting bloc.

Montgomery is also the wealthiest county and a hotbed of opposition to the information technology tax, which goes into effect July 1. Some Montgomery County senators have said in recent days that they would support an income tax surcharge if it were the only way to repeal the tax, but others have said a millionaires' tax would disproportionately affect their constituents.

"I would not support it," Sen. Rona Kramer, a Montgomery County Democrat on the budget committee, said yesterday.

O'Malley's proposal is a political mistake, she said.

"He's coming to the one jurisdiction where he's still popular and saying: 'We're going to make you compromise again,'" Kramer said. "It's going to make him look terrible."

O'Malley spokesman Rick Abbruzzese defended the plan yesterday.

"The computer services tax will negatively impact thousands of small businesses and families throughout Montgomery County and our state," Abbruzzese said. "Aside from helping to craft the computer tax in the first place, Senator Kramer has offered no alternative solutions."

The Department of Legislative services has estimated that the millionaire levy would impact 0.2 percent of tax filers, or about 6,000 people, legislative staffers said.

Sen. Bobby Zirkin, a Baltimore County Democrat on the committee, also said yesterday he would oppose any new tax increases, even if they would allow the repeal of the tech tax. He said he would be willing to delay transportation projects in his district to avoid new taxes if necessary.

Miller said the Senate would take up the measure Monday, but he placed the responsibility for rallying votes with the governor.

He predicted a close vote. He said it was possible that the final plan would leave the transportation trust fund untouched and make up the difference with more cuts to other programs.

"No tax is a good tax in the eyes of the public," he said. "I'd personally prefer a little more on the cutting side rather than taking money from transportation. We're fast becoming in gridlock" in Baltimore and the Washington suburbs, he said, "and I hate to give it up so easy."

• HVAC MECHANIC

• DRIVERS

• FACILITIES PROPERTY MANAGEMENT - ASSISTANT MANAGER

• FISCAL ANALYST III

• BOOKKEEPER

• View all Top Jobs