In a particularly naked bit of pandering, Republican gubernatorial candidate Larry Hogan appeared before the state Fraternal Order of Police this week as part of its process of determining its endorsement in the fall election and promised to exempt law enforcement officers' pensions from the state income tax. As intuitively appealing as it might seem to help those who have served, it's a bad idea.
To his credit, Lt. Gov. Anthony G. Brown, the Democratic candidate, appeared before the same groups a day later and said he would not make that promise, preferring to seek comprehensive tax reform that benefits the middle class rather than making promises to every group. He said more or less the same thing to the teachers after one of his primary opponents promised to exempt their pensions. But the lieutenant governor, who is a colonel in the Army Reserve, had a different message last fall when he proposed exempting military pensions for households with incomes up to $150,000 a year. (Mr. Hogan would eliminate taxation on military pensions altogether.)
Don't get us wrong. We appreciate the service law enforcement officers provide just as we do the service of military personnel. Both groups keep us safe, and they often put themselves at risk to do it. Theirs are noble callings and deserving of not only gratitude but also some assurance that they will be cared for once their careers are done.
But we already provide for both groups far more generously than we do almost any other occupations, even within government. Police officers can generally retire with full benefits after 20 or 25 years of service, depending on the jurisdiction, and those retirees routinely enter second careers until they reach a more typical retirement age. The same is true of military retirees.
Maryland has considered the idea of exempting law enforcement officers' income before, and a 2004 task force studied the issue in depth. It found that 57 percent of law enforcement retirees in the state are 50-64 years in age. Their average pensions in 2005 ranged from $30,200 a year for local police retirees to $60,000 a year for former federal law enforcement officers. When the state last studied the issue of military retiree pensions, it found that their median household income exceeded that of other state retirees by $30,000 a year — and that was more than a decade ago. Certainly a significant share of law enforcement retirees are disabled — 17 percent, according to the task force study — but their pensions are already exempt from state income taxes.
The two major arguments Mr. Hogan and other supporters of such exemptions offer are that whatever favored group is at hand is deserving and that providing them with such a tax break is actually in the state's economic interests if it persuades more of them to stay in Maryland rather than move to a lower (or no) income tax state. Both are flawed.
If police officers are deserving, what about fire fighters? Emergency medical technicians? A bill covering all those groups was introduced by Del. Sheila Hixson, a Montgomery County Democrat and the Ways and Means Committee chairwoman last year, and the department of legislative services estimated it would cost $15 million a year — $9 million for the state and $6 million for local governments. The military exemption is much more expensive: $43 million for the state and $27 million for local governments. And why stop there? Aren't teachers deserving too? What about social workers or those who care for the disabled? Plenty of people do noble things, often for much lower pay than police officers. Why not exempt their retirement income?
As for the notion that exempting police or military pensions from taxes will convince more such retirees to stay in Maryland, why not exempt all retirement income of any kind from income taxes? Indeed, the logical extension of this argument is that we should eliminate income taxes for anyone with the means to move out of state and dump the entire burden on those with too few opportunities and resources to leave.
Both Mr. Hogan and Mr. Brown say that Maryland's tax code needs an overhaul, and we agree. But loading it up with more exemptions for special interests — no matter how sympathetic they may be — is not the way to do it.
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