Maryland Gov. Martin O’Malley last week proposed a budget that would raise taxes by $311 million.
From the Washington Post:
The Democrat outlined a $15.3 billion general fund budget plan that includes about $311 million in new revenue. About $182 million will come from capping income tax deductions and phasing out exemptions.
The governor’s plan would cap income tax deductions at 90 percent for incomes above $100,000 and 80 percent for incomes above $200,000.
It also would reduce exemptions from $2,400 to $1,200 per person for singles who make between $100,000 and $125,000 and couples who make between $150,000 and $175,000. Exemptions would be eliminated for singles who make more than $125,000 and couples with incomes above $175,000.
About $19 million will come from aligning the state’s cigarette tax with other tobacco products. Tax on cigars and smokeless tobacco is 15 percent of wholesale, which was comparable to the 36 cents per pack cigarette tax in 1999. The governor’s proposal would make it 66 percent of wholesale, which would make it comparable to the present $2 per pack cigarette tax.
The proposal also would require online sellers to begin collecting sales tax, which the governor projects would raise about $19 million, but there are questions about enforcement.
Republicans have ripped O’Malley, who earned an “F” for his fiscal stewardship from the CATO Institute back in 2008, for the proposal. “The governor is balancing the budget on the backs of the middle class and small businesses at a time when we should be looking for ways to make them thrive,” said House minority leader Del. Anthony O’Donnell, according to the Post.
However, the tobacco tax increase portion of O’Malley’s plans looks more likely to constitute a tax increase on lower income earners, who use products like smokeless tobacco more than wealthier Marylanders.
In 2007, O’Malley pushed a $1.4 billion tax increase plan that involved corporate, personal income, sales and cigarette tax hikes. He subsequently abandoned tax increases in favor of cutting spending, but critics charge he now seems to be going back to his old ways.
O’Malley is also borrowing more to spend on construction projects, so should he succeed in raising taxes, it may not be for the last time.