Two of Howard County's three state senators sit on the Budget and Tax Committee and participated in key votes for the first set of changes that are reshaping Gov. Martin O'Malley's tax plan.
Democratic Sens. Edward J. Kasemeyer and James N. Robey supported the committee majority in lowering O'Malley's suggested top income tax rate for Maryland's highest-income residents, while rejecting his idea for relief for people earning less than $15,000.
O'Malley has proposed a series of tax increases and changes designed to help close a projected $1.7 billion budget gap next year. The special session of the General Assembly is expected to end this week.
O'Malley wanted to raise the current state rate - a flat 4.75 percent for all income above $3,000 - to 6 percent for individuals making $150,000 and couples making more than $200,000 and to 6.5 percent for those earning more than $500,000 a year. But the committee voted to lower the new rates 1 percentage point in each category, to 5 percent and 5.5 percent, respectively.
Kasemeyer and Robey said the changes make sense to them, despite angry calls and e-mails from anti-tax critics and pressure from liberals to make Maryland's rates higher for wealthy people.
"We didn't want to hurt the average person, and we wanted to be fair in distributing income tax increases," said Kasemeyer, Senate majority leader and vice chairman of the Budget and Tax Committee.
The committee voted to raise personal exemptions $200 a year, he said, and the earned-income tax credit, which helps the lowest wage earners, also was increased.
The problem with the higher rates that O'Malley wanted, Robey said, was that 80 percent of those high earners live in Montgomery County.
"We didn't want to put the whole weight on Montgomery County," Robey said, adding that the committee also voted for a $1,000 added exemption for seniors ages 65 and older.
Why worry about how much people making more than $500,000 a year are paying in taxes?
"You've got to think bigger than that," Kasemeyer said. "What does a company locating there [Montgomery County] think? `I'm going to subject my employees to a significantly higher income tax bracket? I could go across the river to Virginia.'"
Practical things are important, too - such as getting enough votes to pass a total package.
"The point is, the whole thing is put together very carefully to bring in as many people as possible," Kasemeyer said.
At a county Chamber of Commerce breakfast Thursday morning, he said the Democrats "will struggle" to get the minimum 24 Senate votes needed for passage of the major tax measures. In a final vote Friday, the Senate approved the tax package, 24-23.
Kasemeyer said committee members are more centrist politically than the state Senate as a whole, and members are being "whipsawed by both sides" - by those who want a more progressive tax to take more money from the rich and by others who want no tax increases.
Howard's third senator, Republican Allan H. Kittleman, the Senate's minority whip, serves on the Finance Committee. He, like other GOP members, had strong opinions on the sales-tax portion of what his county colleagues did.
"It was the classic bait and switch," he said. "A shell game."
Instead of sales taxes on health clubs, real estate services and tanning salons - all of which vigorously lobbied against the move - the committee substituted computer services, landscaping firms and arcades, without any notice or plans for a public hearing.
"They put in three new [businesses] who had no idea they were even being considered," Kittleman said.
"They're not going to have a public hearing" to allow affected businesses any say, he added. "It also shows the problem with a special session, which is designed to ram things through."
Kasemeyer defended the changes, saying bills are amended all the time.
"It's not a question of fair," he said. "It's just the way the system works."
Robey said the House of Delegates likely would hold a hearing.
Republicans have been advocating budget cuts rather than tax increases to remedy the projected $1.7 billion deficit next year, but others complain that approach isn't fair, either.
Leaders of the Association of Community Services, a Howard County umbrella group representing more than 100 human service agencies, sent a letter to each of the 11 General Assembly members who represent Howard.
The letter, signed by association board President Roy Appletree, urges legislators "to support revenue strategies that would prevent these drastic cuts."
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