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House passes bills to raise Maryland estate tax exemption, earned income tax credit

The Maryland House of Delegates on Friday passed bills that would raise Maryland's estate tax exemption and increase the state refundable earned income tax credit.

The House voted 120-13 to pass House Bill 739, proposed by Speaker Michael E. Busch, D-Annapolis, which would hike the state's estate tax exemption incrementally before coupling it with the federal level in 2019.

The House also voted 134-0 to pass House Bill 198, which would increase the state refundable earned income tax credit from 25 percent to 28 percent of the federal allowance over four years.

The bills on Friday earned bipartisan support and now head to the Senate, where similar bills have been heard but have not been voted on by the Budget and Taxation Committee.

Raising the state's estate tax exemption

Maryland's estate tax is imposed on the transfer of property from the estate of the deceased, if that estate is greater than $1 million for an individual or $2 million for a married couple. The rate is as high as 16 percent.

The federal government taxes only estates worth more than $5.34 million. The discrepancy led to Forbes magazine including Maryland in a story titled "Where not to die in 2013."

Supporters of the bill that passed Friday say Maryland's estate tax is driving their wealthy retired donors out of the state. But opponents - including Maryland Nonprofits, an organization representing more than 1,400 of the state's nonprofits - say the change would cost too much tax revenue.

House Bill 739's companion bill in the Senate, Bill 602, has yet to be voted on by the Senate Budget and Taxation Committee.

Hiking the earned income tax credit

The House's unanimous vote on Friday for a proposal to hike the state's refundable earned income tax credit is likely a positive sign.

Supporters see the proposal as another way to help low-income Marylanders.

The amended measure passed by the House, House Bill 198, would hike the earned income tax credit less than the original proposal, however.

Before it was amended by the House Ways and Means Committee, the bill would have raised the state refundable earned income tax credit from 25 percent to 30 percent of the federal allowance over five years. That same proposal, Senate Bill 727, is still awaiting a Senate Budget and Taxation Committee vote.

But the Ways and Means Committee amended the bill in the House to raise the credit to just 28 percent over four years.

The House and Senate must agree on the same bill.

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