As Maryland wrestles with a $3 billion budget deficit, Governor Moore is asking “Marylanders who have done exceptionally well financially” to contribute “a little bit more” so the state can invest more in economic growth, public safety and education. But previous reports showed an exodus of thousands of wealthy Maryland residents when taxes were raised, as they were under Governor O’Malley. For single taxpayers, Moore’s budget would tax all income beyond $500,000 annually at a rate of 6.25 percent and all income beyond $1 million annually at a rate of 6.5 percent. The previous highest bracket, a 5.75 percent rate for income beyond $250,000, remains intact, while the state tax rate would simplify to a flat 4.7 percent for all Maryland singles earning less than $100,000 a year. There are different figures for married couples filing jointly.
Pass-through peril: Senate Minority Leader Stephen Hershey argues that, “The increase in the personal income tax will be a direct hit to Maryland’s small business community that file as pass-through entities on personal returns.” Most U.S. businesses are taxed as pass-through entities that, unlike C-corporations, are not subject to the corporate income tax. Instead, their owners include their allocated shares of profits in taxable income under the individual income tax. Pass-through businesses include sole proprietorships, LLCs and S-corporations.
