Tax Unrest in MoCo

As we’ve reported below, it is nearly definite that Governor O’Malley will announce a special session of the legislature to deal with the state’s “structural deficit”. This session will, of necessity, consider only tax increases.

But all is not well within the ranks of Maryland Democrats.

On the campaign trail, Gov. Martin O’Malley played up his roots in Montgomery County, a jurisdiction that provided one of every five votes he received in last year’s election. But as he pushes a plan to close Maryland’s $1.7 billion budget shortfall, some of the stiffer resistance is coming from fellow Democrats in his old stomping grounds.

O’Malley’s proposal to make the state income tax more progressive would hit more upper-end taxpayers in Montgomery than in any other jurisdiction, and many of the county’s lawmakers have been at odds with the former Baltimore mayor’s plans to legalize slot-machine gambling.

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Those proposals have divided the legislative delegation, and some members say they are feeling conflicted as they try to reconcile their liberal leanings with the economic interests of Maryland’s wealthiest jurisdiction.

“He stresses that he grew up here, but the way he has treated the county in the budget suggests that he didn’t have a happy childhood,” Del. Luiz R.S. Simmons (D-Montgomery) said of O’Malley (D), who moved from the county to Baltimore when he entered law school.

Earlier in the year a rather juvenile little push poll was conducted by the far left and deceptively named Alliance for Tax Fairness which puported to show that Marylanders were willing to cough up a lot more money if they could only get more of those great state services. Actually, the study demonstrated that people were more than willing to make someone else pay more taxes if it resulted in more swag for themselves. We didn’t need a poll to prove that.

Oddly enough, the jurisdiction that deems itself to be the most progressive and righteous in the state, Montgomery County, is the least satisfied with the idea of higher taxes. (Again, we already knew that).

But under new rates proposed by O’Malley, Montgomery residents earning more than $500,000 would pay a combined rate of almost 10 percent — 6.5 percent in state taxes and the existing 3.2 percent county levy. That surpasses Virginia’s top rate of 5.75 percent and the District’s 8.5 percent. Maryland’s current top income tax rate is 4.75 percent.

Moreover, more than 80 percent of the $163 million expected to be generated by the governor’s income tax plan would come from Montgomery taxpayers, according to an analysis by the Comptroller’s Office. The state would collect less in income taxes from many other jurisdictions, including Prince George’s.

Montgomery County Executive Isiah Leggett (D) and Senate delegation leader Rona E. Kramer (D) have said they fear that such a burden and the sticker shock from the combined rate could hurt the county’s ability to compete with its neighbors in Northern Virginia and the District. Although a family on, say, River Road is unlikely to pack up and leave Potomac for McLean, opponents of the tax plan say that newcomers to the area might choose not to live in Montgomery.

Apparently the heat being felt by the Montgomery County delegation is real:

Among the Montgomery lawmakers who back O’Malley’s tax plan is Del. Sheila E. Hixson (D), chairwoman of the House Ways and Means Committee, who has introduced legislation in past years to raise the tax rate for high-end earners.

Hixson acknowledged the awkward situation for lawmakers in trying to represent their constituents and support the Democratic governor. She said that the governor’s plan might have to be tweaked to make it more palatable and suggested that the higher rates could be limited to a two- or three-year period.

“It’s going to be a problem politically and every other way,” she said.

But she said that if the $163 million is not raised at the state level, it will have to be raised locally to continue to offer services residents expect. “We value services,” Hixson said, “and we’ve always been willing to pay for them in the past.”

The topic is so sensitive that when Madaleno suggested to a reporter that the majority of the delegation would support the governor, he quickly received a half-dozen phone calls from lawmakers distressed by his comments.

Our own colleague, Brian Gill, has written about the direct effect O’Malley’s tax plans will have on him and the high cost to the rest of us has been documented.

This special session is a loser for the governor. Without slots there is no way to slap enough lipstick on this pig to pass it as something else. When these taxes pass they should do so without a single Republican vote.

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