Maryland ‘Tax Burden Scenario’ – Department of Legislative Services Report

Posted on December 1, 2007


The Department of Legislative Services is out with the first comprehensive analysis of the bills passed during the recent Special Session of the Maryland General Assembly. It’s mostly numbers, grist for policy wonks.

Of special interest is page 5, “Tax Burden Scenario – Governor’s Proposal, As Amended by the General Assembly. Impact on Example Taxpayers.” Here you can begin to decide whether the tax package passed in the Special Session is progressive or regressive. The Dept. of Legislative Services gives examples of the tax effects on families at four income levels.

On state and local income taxes, a family earning $40,000 would save $111 per year in income taxes; a family earning $75,000 would save $151; and a family earning $150,00 would save $175.

But a penny increase in the sales tax and an increase in the vehicle titling tax from 5 percent to 6 percent would wipe out the income tax savings. The net result of the income tax, sales tax and titling tax changes: The $40,000 family pays $7 more per year; the $75,000 family pays $45 more per year; and the $150,000 family pays $196 more. Relatively modest increases.

The analysis offers only one example for higher income families. A family earning $750,000 would pay more on all three taxes, totaling $3,613 more a year. Not a hardship for your average $750,000 family. Just my opinion.

Left out of the analysis, and this is important, is the $1 a pack increase in the cigarette tax. This tax is especially regressive for lower- and middle-income people who are addicted smokers. For a one-pack-a-day smoker, that’s $365 a year.

I am coming to the conclusion that the tax package is too regressive. It will impose a hardship on middle- and lower-income taxpayers who smoke. The tax picture will become more regressive if the proposal for 15,000 slot machines at five locations passes the referendum test next November. Slots will be a regressive tax falling heavily on middle- and lower-income people and senior citizens. Just my opinion.

Also of interest, page 7, “Fiscal Effect on Local Governments in Fiscal 2009,” gives a county-by-county analysis. Briefly, the impacts range from a $5 per capita loss for Kent County to a $121 per capita loss for Calvert County.

For major jurisdictions: Anne Arundel County, $43 per capita loss; Baltimore City, $48 per capita loss; Baltimore County, $39 per capita loss; Howard County, $33 per capita loss; Montgomery County, $17 per capita loss; Prince Georges County, $58 per capita loss. Montgomery County came out quite well.

You can find the report on the General Assembly Website. Go to and scroll down to the heading, Budget Information. Click on Maryland General Assembly 2007 Special Session Information. Then, under Briefings and Reports, click on Administration’s Proposals as Amended by the Maryland General Assembly, 2007 Special Session.

Scroll and study to your heart’s delight. Draw your own conclusions.  — Bernie Hayden