Gov. Larry Hogan plans to submit a bill to the General Assembly in January that, if passed, he says will mitigate the worst effects of the tax overhaul measure that passed through Congress today.
While Hogan said the exact impact on the state hasn’t yet been determined, “one thing is clear – it’s that due to the loss of several longstanding federal tax deductions and exemptions that are tied to Maryland taxes, that Maryland state revenue is likely to increase by hundreds of millions of dollars.”
The federal tax reform bill won’t actually completely remove local and state deductions, but it will cap all income, sales and property tax deductions at $10,000. According to The New York Times, this especially hurts Maryland, where 46 percent of taxpayers used such deductions in 2015 and the average taxpayer deducted $13,000.
The new law will also drastically lower the corporate tax rate from 35 to 21 percent, temporarily lower federal tax rates for all seven income brackets until 2025 (after which they’ll go up again) and double the limit for tax-protected inheritances for the rich to $22 million, among other changes.
“Our administration will be submitting legislation at the very beginning of the session next month which will protect Maryland taxpayers and which will mitigate any negative impact of these changes to state taxes,” Hogan said. “Our goal will be to leave all of that money in the pockets of hardworking Marylanders.”
Hogan hasn’t otherwise opined on the merits and pitfalls of the GOP tax bill, but members of Congress have. Sen. Ben Cardin said on the House floor Tuesday night before his colleagues voted in favor of the bill that “Marylanders will come out much worse under this bill.”
Rep. Andy Harris, a booster for the Republican-led effort, said the opposite in a statement, remarking that it “will put more money back into the pockets of Marylanders and facilitate job creation right here in Maryland and across America.”
Cardin said Democrats are already working on a bill to “correct” some of the changes, though nothing has been introduced.