The Maryland Senate’s Budget and Taxation Committee this week voted down two of Gov. Larry Hogan’s bills that would have authorized millions of dollars in tax breaks for retirees.
The Democratic-controlled committee voted 9-4, along party lines, to kill Hogan’s “Retirement Tax Fairness Act of 2019,” which would have expanded tax breaks on retirement income for individual retirement accounts, Roth IRAs and pensions.
A Department of Legislative Services analysis said Hogan’s phased-in tax breaks would have deprived the state of $17.5 million in fiscal year 2020, growing to $56.4 million by fiscal year 2024.
The committee, whose chairwoman is Montgomery County Democrat Nancy King, also voted down a tax break Hogan proposed on military retirement income.
This vote was closer, 7-6, with Democratic Senators Sarah Elfreth of Anne Arundel County and Douglas Peters of Prince George’s County voting with Republicans for the bill.
Hogan’s proposal would have exempted 100 percent of military retirement income from state taxation. A legislative analysis said the phased-in tax break would have deprived the state’s budget of $27.5 million annually by fiscal year 2024.
The proposed tax breaks were among more than $100 million in annual targeted tax credits Hogan proposed during his State of the State speech this year.
But Democratic leadership is concerned about balancing the budget amid reports of lower-than-anticipated revenue and a desire to boost education funding at the state’s public schools.
Hogan spokeswoman Amelia Chasse argued legislative analysts are using only short-term thinking in determining that the tax breaks would deprive the state of revenue. Chasse argued enticing more retirees to stay in state — instead of moving elsewhere for lower tax rates — would keep more money in Maryland’s economy.
“Making Maryland more affordable for retirees not only benefits the retirees, it also benefits our entire state by keeping them here in Maryland,” she said. “It’s inexplicable why the Senate wouldn’t even bring these bills to the floor for a vote.”