The Maryland General Assembly has just concluded its special legislative session, passing an income tax increase that will prevent significant cuts to important government programs, and K-12 and higher education.
Nothing is more important to me than our kids and their education. So why did I vote AGAINST this tax increase?
I am a progressive, and I strongly believe that those of us who have the ability to pay more for government services should do so. I know many of my constituents agree with this basic principle.
Unfortunately, the tax bill before us discriminated significantly against two-income working families with young kids. And that is something I simply could not support.
The legislation will bring in new tax revenue from families and individuals through two different changes to the income tax code. These changes disproportionately impact middle class families with kids, when compared to individuals, unmarried couples, married couples without kids, and married couples with grown children. What that means is that couples raising kids will see a much higher tax increase than all other groups of taxpayers.
1) The Personal Exemption Phase-Out
Under current law, every taxpayer can claim a personal exemption for themselves, their spouse, and their dependent children. The exemption amounts vary depending on your filing status (married/single) and your income bracket.
The new tax plan eliminates all personal exemptions for families making over $200,000 a year. It also reduces the personal exemption for every family member by $1,000 for families in the $175,000-$200,000 bracket, and by $800 for every family member in the $150,000-$175,000 bracket.
For families with a combined income over $150,000, this amounts to a flat fee per child between $53-$107. A family of four with a combined income of $150,000 will pay $278 in new Maryland taxes thanks to this exemption phase-out (an family o four with combined income of $200,000 pays $394). However, a single man making $150,000 will pay only $104. A single millionaire will pay only $53 extra. Even if that millionaire had a wife and two kids, they would pay only $212 in new taxes from this exemption phase out.
This part of the tax plan brings in $82 Million, almost entirely from middle class families with two working parents and dependent children. Based on data available from the Comptroller’s Personal Income Tax Statistics of Income report, I believe that 78% of the estimated 300,000 tax filers affected will have incomes under $250,000. 85% will have two working spouses, and 70% will have dependents at home.
2) New Tax Brackets With An Expanded Marriage Penalty
In current tax law, married Marylanders pay a higher tax rate than their single colleagues in the exact same jobs starting at a household income of $200,000. This is known as a "marriage penalty." By changing the tax brackets, this legislation expands the higher marriage penalty tax rates to affect couples earning $150,000 (for example, a husband and wife who each earn $75,000). This makes absolutely no sense to me, because when both parents are working, household expenses, including childcare, are higher, not lower.
In addition, the highest marginal tax rate of 8.95% will now be applied to married working parents who together earn over $300,000, but not to a single person living on $250,000. Likewise, a single person earning up to $100,000 will pay a lower tax rate than a married couple raising kids who earn just over $150,000 combined.
The combined disproportionate impact on two-income working families of the personal exemption phase-out and the marriage penalty in the new tax brackets made it impossible for me to support this tax bill in good conscience.
It is my job to go to Annapolis to represent the interests of District 16. In my opinion, this tax plan will disproportionately burden the working families in our area who are struggling to live in an extremely high cost of living area. That is not consistent with our communities' values or interest in supporting the greater good for Montgomery County and the state of Maryland.