ANNAPOLIS, Md. — If you live in Maryland, will the Governor’s proposed budget increase your taxes?
For weeks, we’ve covered Maryland’s $3 billion budget crisis. Governor Wes Moore’s plan to fix it cuts approximately $2 billion in spending while also raising taxes on Maryland’s wealthiest residents.
However, a new analysis shows that tax increases could affect some of Maryland’s middle class.
In January, Governor Moore proposed a plan to simplify taxes and increase them only for the wealthiest Marylanders.
“Eighty-two percent of Marylanders will get a tax cut or no change at all,” he said.
The majority of Marylanders would see a tax cut, but the state comptroller’s office warns that simplifying taxes could cost middle-class families.
“Some of what Governor Moore said is correct,” Allegany County’s Minority House Republican Leader Del. Jason Buckel stated.
The comptroller’s report from the Board of Revenues Estimates revealed that taxes will only increase for Marylanders earning $500,000 or more.
“When you acknowledge that almost 50% of the new taxes, which is estimated at $600 million in new taxes, is gonna come from middle and upper-middle-class families,” according to Del. Buckel. “That’s a real problem.”
Governor Moore’s tax plan simplifies the tax code by doubling the standard deduction, but it eliminates deductions for mortgage interest, charitable contributions, and childcare expenses.
“A lot of middle-class families deduct and they are used to deducting,” Buckel told me. “As a result, your tax bill is going to go higher.”
According to the Board of Revenue Estimates report, approximately half of Marylanders making less than $500,000 may face tax increases.
It conducted the analysis by applying changes in tax brackets, deductions, and capital gains to Maryland tax filings for 2023.
These increases vary based on income bracket. For example, one in every four Marylanders earning between $75,000 and $100,000 could receive an average increase of $660. For one in every three people in the $100,000 to $200,000 range, the changes would result in an average $877 increase.
The majority of tax increases would disproportionately affect those earning $500,000 or more.
It also agrees that the majority of tax increases fall on those earning $500,000 or more.
Governor Moore’s office responded to the report this afternoon with the following:
“Gov. Moore proposed a bold tax reform package that simplifies, equalizes, and lowers taxes for the majority of Maryland families. The governor’s tax reforms benefit over 1.7 million Maryland households, 90% of which earn less than $200,000.
Furthermore, by doubling the standard deduction and increasing the child tax credit, the plan directs hundreds of dollars in tax relief to working families across the state. Eliminating itemized deductions creates a far simpler tax system that treats all Marylanders equally.
This is why the Center on Budget and Policy Priorities described Gov. Moore’s plan as a “blueprint [that] more states should follow.”
By raising tax rates on our highest earners, the plan asks those who have worked hard to contribute a little more. This is why only one-third of households earning $100,000 to $200,000 face a minor tax increase, whereas nearly all households earning more than $1 million pay more.
Overall, three-quarters of the reform package’s revenue comes from households earning more than $500,000, which currently has the lowest overall tax rate when all state and local taxes are considered.”
This is simply a proposal for tax reform to help close the budget gap. The governor and lawmakers are still working it out.
