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Tax hikes would harm Md. economy, White House report finds

ElectionsBarack ObamaRepublican PartyFiscal Cliff (2013)Democratic PartyWhite House

WASHINGTON -- Marylanders would spend nearly $3.9 billion less in 2013 if Congress fails to extend middle-class tax cuts, according to a report released Wednesday by the White House that is part of a broader campaign to influence fiscal cliff negotiations.

The decline in consumption caused by higher taxes would slow the state's economic growth by 1.4 percentage points, according to the report.

The state-specific estimates are based on a report issued Monday by the president's Council of Economic Advisers that discussed the national economic impact of allowing certain tax cuts to expire at year's end. The numbers come as the Obama administration seeks to pressure congressional Republicans to consider middle-class tax cuts now, decoupling them from more thorny issues that must be resolved to avert the fiscal cliff.

"So if both parties agree we should not raise taxes on middle-class families, let's begin our work with where we agree," President Obama said at a White House event Wednesday. "Democrats in the House are ready to vote for that same bill today. And if we can get a few House Republicans to agree as well, I'll sign this bill as soon as Congress sends it my way. I've got to repeat, I've got a pen. I'm ready to sign it."

The argument is not new. Democrats have sought to strike a deal first to extend the Bush-era income tax cuts on income below $250,000 before moving on to breaks for high earners. Republicans also favor extending middle-class tax breaks, but most want to address those as part of broader deficit reduction deal that also lowers taxes for everyone.

Republicans argue raising tax rates on income over $250,000 -- an idea Obama successfully ran on in this year's election -- would also harm the economy.

Maryland stands to be disproportionally affected no matter how the cliff talks end. No action would trigger deep, across-the-board cuts to federal agencies and contractors based in the state. But a deal to avert the cliff will also come with spending cuts. Because of its proximity to Washington, Maryland is one of the highest-ranked states for per capita federal spending.

While Obama prepares to go on the road Friday to make his pitch directly to voters in Pennsylvania, one Maryland elected official has been busy lobbying for a deal in Washington. Anne Arundel County Councilman Jamie Benoit, a Democrat and leader of the state's Fix the Debt chapter, spent much of Wednesday talking with conservative Republicans on Capitol Hill.

Benoit said he was encouraged by the meetings, which continue Thursday. The bipartisan group is pushing for a sweeping debt-reduction deal along the lines of the framework developed by the Simpson-Bowles commission in 2010. That report called for a mix of tax increases and spending cuts to trim federal budget deficits.

"Sometimes voting against your self interest is what you have to do," Benoit said. "Everyone needs to hit pause for a second and ask themselves what's best for the country."

Copyright © 2014, The Baltimore Sun
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