Maryland Senators Offer Income Tax Compromise

Maryland senators submitted a compromise on Thursday on how to raise revenue in a package of budget legislation by increasing income taxes.

The proposal, outlined by Sen. Edward Kasemeyer during budget negotiations, would raise about $309 million for the next fiscal year. The compromise would not increase taxes for anyone making $100,000 or less. Instead, it would raise income tax rates higher for people who make more than that.

The Senate compromise also would include some reductions in income tax exemptions.

Delegate Kumar Barve, D-Montgomery, said he likes much of what the senators are proposing, but he said he doesn't support the idea of reducing tax exemptions for people who make less than $100,000 by $200.

“We're going to go back, look at this, digest it and come back with a counterproposal,” said Barve, who is on the House-Senate conference committee.

The proposal also reduces exemptions for people in other tax brackets. They are eliminated for people who make more than $150,000.

The main goal of the compromise was to address disagreement with the Senate proposal to raise taxes by a quarter of a percent for nearly all taxpayers.

Under the Senate compromise, a single taxpayer who makes between $100,001 and $150,000 would see an increased rate from 4.75 percent to 5.2 percent. That rate also would apply to joint filers who make between $150,001 and $200,000.

The state income tax rate would rise from 5 percent to 5.45 percent for single filers who make between $150,001 and $300,000 and for joint filers who earn between $200,001 and $350,000.

The rate would jump from 5.25 percent to 5.75 percent for singles who make between $300,001 and $500,000 and joint filers who earn between $350,001 and $500,000.

People who make more than $500,000 would see a rate increase from 5.5 percent to 5.75 percent.

Kasemeyer also said senators were willing to accept part of a House proposal on how to split the cost of teacher pensions, another key part of a package of budget legislation.

The House would phase in a pension split over three years, with half the county portion shifting in the first year, 75 percent in the second and 100 percent in the third. The Senate's initial position would phase it in over four years, with 25 percent of the expense in each year.

But Kasemeyer said senators would be willing to accept the House proposal to shift 50 percent in the first year.

“We'll take your proposal for year one and work something out from there,” Kasemeyer, D-Baltimore County, said.

The legislative session is scheduled to adjourn on Monday. Lawmakers are trying to balance the books for the next fiscal year and reduce an ongoing $1.1 billion deficit by about half.