Senate opts for millionaire's tax, gives initial nod to budget package

Maryland's Senate took a philosophical turn to the left Wednesday night and approved a new "millionaire's tax" for anyone earning over $500,000 as they gave their initial nod to the state spending plan.

The Senate is set to come back for final approval Thursday, as key House committees finalize their version of the budget. The two chambers will have agree on a spending plan.

The last minute change to the Senate plan adds $30 million in new revenue to the state coffers. The funds are divvied for aging schools and municipalities. Baltimore City would see $6.7 million in new schools funds. Baltimore County would get $5.8 million.

Senate President Thomas V. Mike Miller said he thinks the House will be "very pleased" with the final Senate product. "There will be some changes and there will be a conference committee. There is some tough stuff. They might take issue with things."

On Thursday, the Senate met for two sessions and debated four interrelated bills that the Democratic Senate leadership wanted to pass as part of the budget. Measures included the standard budget bill along with another bill that made legislative adjustments needed for the budget.

Also, the Senate debated a bill that would allow the state -- in some extreme circumstances -- to seize county income taxes and use those funds to bolster local education funding.

The bill that most that will directly impact most Marylanders was the fourth measure -- Sen. Roger Manno's legislation to raise income taxes across-the-board, raising $416 million in state revenue. Joint filers making $120k would see a $147 increase to their income tax bill.

The Senate approved it, but also added a twist.

The tax rate for anyone making over $500,000 would go up from 5.5 percent to 5.75 percent. (If you include the local piggy back taxes, the rate would go up to 8.95 percent for Baltimore residents.) 

And, unlike how Maryland usually changes taxes, the new 5.75 percent rate would apply to every penny, not just the earnings over $500,000. 

Miller said that "a lot" of the Democratic senators who supported the change "did not care for the amendment" but voted yea because "they were interested in moving the bill forward." He said the change was "nod to the more progressive members of our caucus, that we were listening to their concerns."

Senate GOP leader E.J. Pipkin said he only learned about the idea Wednesday evening, and was flabbergasted that the Senate decided to add an extra $30 million in taxes for no apparent reason.

"We've already raised $414 million in revenue," Pipkin said. "Why do we have to raise another $30 million?"

"At some point we've crossed over to this tax no man's land where we are just raising all kinds of taxes, and sharply." Pipkin said. "It is a huge increase."