Topline:
On December 20th, when it became clear that federal tax reform would be signed into law, Governor Hogan immediately announced his commitment to submitting legislation to protect Marylanders from potential negative impacts of the federal tax overhaul.
The Hogan administration is fully committed to doing everything they can to reduce the impact of the federal government imposed tax burden on Marylanders.
Impact Of Federal Tax Reform On Maryland:
While an analysis by the Comptroller’s office found that federal taxes will go down for most Marylanders, including lower and middle class taxpayers by a total of $2.8 billion, there could be an opposite effect on state and local taxes.
Marylanders will face paying at least $572 million more in state and local taxes for fiscal year 2019 – this would affect nearly 800,000 Maryland taxpayers.
Marylanders could also potentially face an additional $1.2 billion increase in state and local taxes due to the loss or reduction of several long-standing federal tax deductions and exemptions.
Protecting Maryland Taxpayers Act Of 2018:
The Protecting Maryland Taxpayers Act of 2018 will ensure that Marylanders are protected from the negative impact at the federal level, on their state taxes.
Governor Hogan’s proposal does two things to address the problems Marylanders may face:
o First – The governor’s bill makes permanent a provision in Maryland law that prevents changes in the federal tax code from affecting Maryland state and local taxes. Section 10-108 in the Maryland tax code currently stipulates that Maryland taxes will not be impacted by federal changes for a period of one year – the governor’s legislation will make that provision permanent.
o Second – The second provision of the governor’s proposal would provide that taxpayers are no longer required to take the standard deduction on their state taxes if they have taken the standard deduction on their federal taxes, allowing Marylanders to take advantage of the new higher federal standard deduction while continuing to take longstanding exemptions and deductions at the state level.
Under this proposed legislation Marylanders’ state and local taxes will not be increased – this legislation will ensure that this money will remain in the pockets of hardworking Maryland families and small business owners.
Protecting Taxpayers Is A Bipartisan Issue:
It is imperative that the legislature work with the Hogan administration to find a solution and to create certainty for Maryland taxpayers.
Protecting taxpayers is a bipartisan issue – Governor Hogan is calling on legislative leaders to work with the Hogan administration to come together and find a common sense, bipartisan solution to protect Maryland taxpayers.
To begin this process, the governor has appointed a negotiating team of five members from his administration to work with legislative leaders to come to an agreement – an agreement must be reached before the fiscal year 2019 budget is passed.
Protecting Health Care For Marylanders:
As a result of the actions or inactions in Washington D.C., the Affordable Care Act will force health insurance rates to increase by 50% or more for Marylanders in the coming months.
It seems that neither political party in Washington D.C. has the will or ability to fix these problems, but Maryland will address them head on.
Governor Hogan announced that his administration will work with the legislature to develop bipartisan solutions in order to stabilize rates and prevent massive increases.
The stakes are tremendous – if nothing is done rates will increase by at least 50% in the individual market and thousands could lose their health insurance – Maryland’s medical waiver, which the Hogan administration spent the past year getting renewed could be in severe jeopardy.
Conclusion:
These issues of protecting Marylanders are much too important and far-reaching to risk getting it wrong.
Governor Hogan has repeatedly said that he would work to find the best ideas regardless of which side of the aisle they come from – by engaging in thoughtful, honest, and civil debate there is no problem that Maryland cannot solve by working together.
