xml:space="preserve">

Maryland’s lawmakers continue to work on updates to the state’s tax code in response to the federal overhaul as the legislative session enters its final few weeks. But a proposal unanimously passed by the Senate last week would likely allow the state to collect additional revenues from taxpayers without actually taking action to raise rates.

The federal tax law limits the ability to itemize state tax returns unless filers already itemized their federal returns. One of the keys to the tax overall out of Washington was that it increased the standard deduction, meaning more people would take it. In turn, that means more Marylanders will take the state standard deduction as well. If unchanged, about a quarter of Maryland residents would likely pay more in state taxes.

Advertisement

Comptroller Peter Franchot’s office has estimated that as many as 700,000 Maryland taxpayers who previously itemized their returns will now claim the state standard deduction. That, and additional changes to the federal tax code that eliminated other miscellaneous deductions, will result in Maryland collecting roughly $361 million in additional tax revenues in fiscal year 2019.

Talk about a hidden tax.

With less than one month to the end of the Maryland General Assembly, while members Carroll County’s delegation feels confident at some progress on its their bills, concerns about the federal tax bill’s impact on Maryland remain.

The good news is the Senate bill raises the standard deduction from $2,000 to $2,500 for individuals and from $4,000 to $5,000 for joint filers in Maryland. However, only about a third of the windfall Maryland is experiencing as a result of changes to the federal tax code will be returned to taxpayers as a result of this change.

While the federal tax law had its own set of problems, Marylanders should be upset that state legislators — many of whom ripped President Donald Trump and Republicans in Washington for the tax reform — are now disingenuously using it to take in more revenue for the state.

A bulk of that money, roughly $200 million, is being earmarked in the budget to be used for future education costs that will be recommended by the Kirwan Commission, which has made several recommendations regarding education reform in Maryland and has been reviewing state-funding formulas.

Certainly, there are worse uses of taxpayer money than improving education. However, the means to do so seem deceitful and a prime example of election-year politics. Many lawmakers seeking re-election later this year will no doubt point to turbulence in Washington and talk about how they will work to protect their constituents from policies that come from inside the Beltway.

Meanwhile, those same individuals will take advantage of unpopular federal law to add to the state’s coffers, rather than returning more dollars to taxpayers.

Perhaps lawmakers think this is a less painful way to ask for the money they would need to fund education reforms in the coming years anyway. Perhaps they are right.

The lack of transparency is disappointing. Sadly, many taxpayers probably won’t even notice.

Advertisement
Advertisement
Advertisement