The “Tax Cuts and Jobs Act H.R. 1” recently passed by the U.S. House of Representatives will take us a giant step backward and erode our state’s quality of life. The reduction of federal revenues by $1.5 trillion will essentially cripple our ability to stay on track in growing our economy and creating opportunity for all Marylanders. One third of Maryland’s budget comes from federal sources, and such massive reductions in federal revenue will necessitate drastic reduction in community investment.
Tax cuts for corporations and the wealthy will put pressure on all other workers in Maryland. The “tax reform” bill fails to expand the highly successful Earned Income Tax Credit for lower-wage workers. The bill rewards those who derive their income passively, from assets held or inherited, over the majority of Marylanders who work hard for their wages. Estimates on the bill’s prior published “framework” show that Maryland tops the nation in the share of households that would see a tax increase under the bill (30.5 percent) while the top 0.8 percent richest Marylanders would enjoy a $93,000 tax cut. Doubling the exemption on the estate tax, then repealing it, would give millions to the wealthiest heirs while slashing the government’s ability to invest in education, public safety, infrastructure, health, housing, the arts and the environment.
Nonprofit organizations are major contributors to Maryland’s economy, accounting for 9.3 percent of all jobs in the state and contributing billions in social benefit. Nonprofits enable people to get off the unemployment rolls, support recovery from addiction and facilitate jobs for people with disabilities and other barriers.
Nonprofit organizations are part of the private sector and a backbone of entrepreneurship in Maryland. Nonprofits support the creation of small businesses, create downtown redevelopment districts and get all generations involved in volunteering and civic pride.
They operate like businesses and get most of their income from fees for service (42 percent), and 32.5 percent of revenue comes from government. We often hear that “philanthropy will fill in the gaps from government cuts.” But, charitable giving from individuals, corporations and foundations combined only accounts for 13.5 percent of all nonprofit revenue, and even massive increases in giving could not fill in the gap. Ironically, the proposed tax cuts for top earners will provide a disincentive for Maryland’s wealthiest to give more to charity! H.R. 1 is estimated to have a potential nationwide impact of $13 billion less in charitable giving, while putting pressure on direct funding for programs that enable people to become self-sufficient, contributing members of society.
The proposed tax reform would hit hard at Maryland’s economy in so many ways — increasing inequality, diverting resources from communities to the ultra-rich, depressing charitable giving and hampering our ability to keep more Marylanders actively engaged the workforce, starting businesses, raising their children and staying healthy.
Our quality of life in Maryland depends a lot on federal and state budgets necessary for a modern infrastructure, great education, clean air and water, and reinvestment in communities. Jobs are created when towns embrace the arts, create recreation for tourism and health, and act strategically for better transportation, housing and commercial hubs.
We grow our economy when we prepare our workforce for new technology, invest in green energy, new construction and a better future. Our standard of living increases when we bring out the full potential of all Marylanders, when all children have equal opportunity, when neighborhoods are safe and walkable, and when all families have access to transportation, child care, health care and fresh groceries. Investments from all three sectors: businesses, nonprofits and government are needed to get resources aligned to make all communities strong for a thriving economy.
Direct community investments will have far more impact than tax cuts for people who will use the extra money primarily to buy more stocks and bonds and other assets.
We need an equitable tax code that enables our nation and the state of Maryland to invest in communities. When we include everyone in our economy — regardless of race, gender identity, religion, disability or geography — we build a strong workforce and strong communities that fuel healthy businesses and create more jobs.