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Politics

Maryland Governor Larry Hogan tax relief targets poor families, new manufacturing

Maryland Gov. Larry Hogan on Tuesday proposed granting a slightly bigger tax break to small businesses, increasing in exemptions for retirees fivefold and luring manufacturers to the state with a decade-long tax break.

Hogan, a Republican, unveiled the basic outline of tax cuts bills he hopes the Democrat-controlled legislature will pass, describing his package as "common sense."

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"Anyone that isn't in favor of that, probably doesn't deserve to be in the legislature," Hogan said during an Annapolis news conference. "I can't imagine how anybody could vote against these."

He also wants to reduce a dozen fees for items such as birth certificates and fishing licenses, as well as speed up a planned tax refund for poor families.

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While Democrats chided Hogan for his rhetoric, they signalled support for two of the plans he proposed.

"That's stepping over the line," House Appropriations Chair Maggie McIntosh said of Hogan's remark. "We can disagree. It's all right. We don't have to demonize each other."

McIntosh said she supported Hogan's proposals to more quickly increase the earned income tax credit for poor families and to create tax breaks for manufacturers in Baltimore.

For poor families, Hogan proposed that a modest, planned tax break take effect two years earlier than scheduled.

The legislature passed a 2014 law that spread a 3 percent increase in the earned income tax credit over four years. Hogan proposes having it take effect immediately. A family of five making $53,000 or less will qualify for the credit this year, as would a single person making less than $14,000.

"The earned income is one of the best, most successful tools we have to help working people grow themselves and their families and move out of poverty," said McIntosh, a Baltimore Democrat. "We need to do more in terms of expansion."

She said several Democrats were working on legislation to create a bigger refund and include more families in the program.

Legislative analysts say the highest percentage of people claiming the credit come from Baltimore City, Western Maryland and the Eastern Shore. The program has increased annually since the credit began in 1998, and about 13 percent of state households claim it, though many more qualify.

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Hogan also proposed granting a 10-year corporate tax income break for manufacturing companies new to the state who open in Western Maryland, Baltimore and the lower Eastern Shore, areas where unemployment is dramatically higher than the rest of the state.

"We've lost 28 percent our manufacturing base because other states were stealing our manufacturers," Hogan said. "It was like spearing a fish in a barrel. It was too easy. We're trying to bring back the manufacturing base because there are a lot of hard-working people in the heartland of Maryland who want to work."

Hogan's manufacturing tax amnesty would extend to employees of those businesses. Workers earning less than $65,000 a year would be exempt from state income taxes for a decade.

McIntosh praised that proposal and its impact on city residents, saying "this is what they need."

Republican House Minority Leader Nic Kipke said Hogan's proposal was "vital" to restoring the state's manufacturing base. Kipke predicted the proposal would be well received by lawmakers on both sides of the aisle, adding "I think it will be very difficult to resist for purely political reasons."

The governor also proposed increasing over five years the personal property tax exemption for seniors from $1,000 to $5,000.  And he suggested reducing a filing fee paid by small businesses from $300 a year to $100.

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If passed by the legislature and fully implemented, Hogan's administration estimated the tax cut package to cost $480 million total.


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