Income tax still up in the air, gas tax dead in the water

As the final days of the 2012 legislative session wind down, it looks more and more likely that Maryland taxpayers will be forking over more to the state government next year.

Who will be paying and how much, however, is still up for debate in the halls of the State House.


One silver lining is that the governor's proposed gas tax increase appears to be dead for the 2012 Maryland General Assembly session, which winds up Monday. Regardless, average pump prices across the state edged above $4 a gallon, AAA Maryland reported Thursday.

In March, the House of Delegates approved a legislative package that included its version of the state budget, a shift of teacher pension costs to the counties and increasing income taxes on high-earning residents. Harford County's delegates opposed the package.


The Senate and House's version of the budget, though, differ and has gone to a conference committee to work out a final version.

The biggest question on most residents' minds and the main squabble between the five senators and five delegates on the revenue bill conference panel: Who is going to pay the higher income tax?

In the Senate's plan, taxes would be increased on a sliding scale for all Maryland taxpayers that earn more than $3,000 annually, according to a report from The Baltimore Sun. This would raise $475.8 million in revenue for next year's budget.

The House proposed raising taxes on individuals who earn $100,000 or more and couples who make $150,000 or more, raising $191.8 million in revenue, The Sun reported.

Western Harford Del. Rick Impallaria calls the latter a "marriage penalty."

If a couple files their taxes jointly, Impallaria said, each person could potentially pay more than if they filed individually.

"I definitely have a problem with that," he said.

Fellow Western Harford Del. Kathy Szeliga agrees.

"It's disappointing that they [the state] want to start increasing taxes on [individuals] that make $100,000 and $150,000 for a couple," Szeliga, also a Republican in District 7, said. "Why are we penalizing married people?"

The delegate gave an example of a married couple that are both teachers.

Szeliga said she looked up the average pay for a teacher in Montgomery County, one of the highest paying counties in the state.

If a teacher made the average salary, about $76,000, and his or her spouse made the same, the couple would be in a higher tax bracket if they file jointly.

"It's not like they [the state] are taxing the rich," Szeliga said. "These measures are going to affect everyone."

Northern Harford Sen. Barry Glassman believes the income tax bill "will kill Maryland jobs just when we were starting to see some recovery."

Harford County Executive David Craig said recently that a large international company eyeing Harford for a new operation backed off after company executives saw the state income tax increases being proposed in Annapolis.

Glassman said the state budget should be held to flat increases, except for funds with mandated costs such as Medicaid.

"These budgets are predictable every year, containing the same spending increases, robbing the trust funds, promoting gimmicks based on dishonesty," wrote Western Harford Del. Pat McDonough in an e-mail. "I have never voted for a tax increase, and as long as every one of these budgets contains a tax increase they will not have my vote."

Gasoline tax

"I am fairly confident that the gas tax is not going to move since we are already paying double the cost per gallon than it was four years ago when President [Barack] Obama came into office," wrote Glassman.

When O'Malley testified before three General Assembly committees in March, it seemed that lawmakers were already of the mindset not to pass it.

O'Malley recently told The Baltimore Sun that applying the state's 6 percent sales tax to gasoline purchases was, indeed, dead.

That isn't to say it's gone forever.

An alternative, O'Malley continued, would be to delay the additional tax until fuel prices decline to a specific level.

Another option, he added, would be to raise Maryland's general sales tax to 7 percent and then earmark the additional revenue for highway and transportation projects.

While many Maryland gas stations have been pricing a gallon of gas above the $4 a gallon mark within the last two weeks, the state's average finally hit $4 overnight last week, according to AAA's Fuel Price Finder.

In a news release send out early Thursday afternoon, AAA Maryland said the Baltimore area's average gasoline cost had reached $3.99 a gallon, while the average gallon price in the Maryland suburbs of Washington, D.C., had matched Maryland's all-time record high average of $4.05 a gallon, set on June 17, 2008.

AAA said Maryland's average price is six cents above the national average and that the state had joined the District of Columbia and 10 other states with an average gallon price at $4 or above.

Gas tax increase or not, and with the income tax debate still roiling, the 2012 Maryland General Assembly session will end at midnight April 9.