www.baltimoresun.com/news/maryland/bs-md-house-committee-budget-20120319,0,5148728.story

baltimoresun.com

House panel would raise taxes-- but less than Senate

Bill would spare taxpayers who earn less than $100,000

By Michael Dresser, The Baltimore Sun

8:18 PM EDT, March 19, 2012

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A Maryland House committee voted Monday to raise income taxes — but by a significantly smaller amount than either Gov.Martin O'Malleyor the Senate has proposed.

The House plan, backed by SpeakerMichael E. Busch, would spare taxpayers who make less than $100,000 from any increase.

The Senate plan passed last week would raise about $473 million by increasing income taxes on all but the lowest-income Marylanders. The House plan, passed Monday by the Ways and Means Committee on a party line vote, would raise about $200 million in new revenue each year.

The House committee's proposal goes now to the full chamber. Eventually, the House and Senate will adopt a budget after they resolve their differences. The governor and House and Senate leaders are all Democrats.

The House bill would require deeper budget cuts than the Senate approved, and it would shift some teacher pension costs to the counties over a three-year period rather than the four years in the Senate plan, according to House Majority Leader Kumar Barve.

The House plan also junks the Senate's so-called "super-bracket," a proposal to tax every dollar earned by people making $500,000 at the highest rate.

Barve, a Montgomery County Democrat, described that provision as "bizarre" and said he knew of no place that taxes income in that manner. Generally, tax rates apply to the dollars earned in each bracket.

"That gave everyone a lot of heartache," said Del. Aruna Miller, a Montgomery County Democrat.

Barve estimated that 87 percent of Marylanders would pay no additional taxes under the House plan.

The House bill combines elements of the Senate proposal and the governor's original tax plan. Like the Senate, the House would increase income tax rates — but only on individuals making more than $100,000 and couples who earn more than $150,000 after deductions. Each bracket above those levels would see a quarter-of-one-percent increase, in effect reversing the income tax cut adopted under Gov. Parris N. Glendening in 1997.

The plan also scraps the so-called "Amazon.com" tax, in which the Senate attempted to gain some revenue from online merchants who avoid the state's sales tax. Committee members concluded that the extra revenue wasn't worth the risk that Amazon and other online companies would dump local affiliates in order to avoid the tax.

Health advocates won a victory as the panel voted to match the Senate's increase, from 15 percent to 70 percent, in the tax on small cigars of the type favored by many young people.

While all of the committee's Republicans opposed the income tax increase, the House bill drew a compliment from a GOP delegate.

Andrew A. Serafini, a Washington County Republican, said he appreciated the changes the committee made in the Senate bill. "This is a better version," he said before voting against it.

michael.dresser@baltsun.com