Jan. 8 marked the beginning of my second session in the Maryland State Senate representing District 35. It is an honor and a privilege to work on behalf of the citizens of Cecil and Harford counties in Annapolis.
One of the main issues I campaigned on in 2018 was opposing higher taxes on Maryland families and I maintain that commitment to allow our citizens to keep more of their hard-earned money. Unfortunately, many legislators do not share that viewpoint and have introduced bills that would raise taxes. Among those tax increases that have been floated include a snack tax, increasing the cigarette tax, and a tax on digital advertising.
One idea introduced in the House of Delegates was House Bill 1628, which would reduce the sales tax rate from 6% to 5% but then expand the taxable base to include services. These taxable services would include haircuts, accounting services, funerals, pet grooming, lawn mowing services, home improvement projects and more. This tax expansion would be the largest increase in Maryland history, even more than all of former Gov. Martin O’Malley’s tax and fee hikes combined.
The proponents' reasoning for expanding taxes is to fund the state portion of the Kirwan education recommendations, which calls for $32 billion in new spending over the next decade. The district I represent shares a border with Pennsylvania and Delaware, a tax expansion to include services would lead to consumers traveling across state lines to where they won’t be taxed for services.
House Bill 1628’s fiscal note confirms this notion: “To the extent possible, residents may purchase services in neighboring states where these services are not taxed (or are taxed at a lower tax rate) or may choose not to purchase these services at all. The extent to which this may occur cannot be reliably estimated, but a majority of Maryland residents live within a short distance to a neighboring state and, therefore, could have access to service providers located in other states. While the percentage will vary from service to service, many of the service providers in each of the categories are small businesses.”
(Editor’s note: A House subcommittee that reviews tax changes rejected the sales tax bill on a unanimous, bipartisan vote late Wednesday night.)
A recent Goucher poll of Maryland residents was conducted that showed 51% say that the overall amount of state taxes they have to pay is “too high” and 44% say it’s “about right." Only 39% ranked Maryland as a good place to run a business, and just 27% think of the state as a quality place to retire.
As state leaders, we need to be looking at easing challenges and tax burdens for our small businesses and retired citizens, not expanding them. For example, Gov. Larry Hogan put forth legislation that would decrease the tax burden for retirees 65 and older. I applaud the Governor for taking the initiative to help make Maryland a friendlier place to retire. I was happy to co-sponsor this important legislation and hope to see it receive a passing vote and become law.
This past February I offered a partial funding source by way of Senate Bill 644 – Income Tax Checkoff – The Blueprint for Maryland’s Future Fund. If enacted this legislation would create an income tax checkoff option on Maryland income tax returns. An income tax checkoff is a voluntary donation where taxpayers can either pass over a portion of their refund or add to their payment. While this source wouldn’t generate anywhere close to what is needed for the Kirwan plan, it would offer a solution for the minority of Maryland residents that would like to pay more towards education.
I would also like to take a moment to encourage current high school seniors or college students living in District 35 that are planning to attend a Maryland institution to consider applying for a Maryland Senatorial Scholarship. For those interested in applying, please contact my office at jason.gallion@senate.state.md.us or 410-841-3603 and my staff would be happy to provide you with an application and more information. I am looking forward to the final month of session and sincerely thank the citizens of Harford and Cecil counties for the opportunity to serve you in the legislature.
Jason Gallion is a Republican in the Maryland State Senate representing District 35.