Now that Maryland has turned up its tax rates a couple more watts, big and bright as neon, is it too much to ask the state to stop taking even more of our money under cover of darkness?
We pay Maryland in multiple ways beyond the sticker price. One of the biggest offenders will be on display today before the Senate Budget and Taxation Committee - the extortionate interest the state collects on late taxes.
You might think a legislature with a history of outrage over private-sector usury would be embarrassed by its own resemblance to Tony Soprano.
Alas, Maryland's 13 percent rate on late tax payments - mostly income taxes but others as well - is on its third governor and going strong. That's far above the real cost of money, way over what the federal government charges and the sixth-highest rate for delinquent state taxes in the country, according to data from the 2007 State Tax Handbook.
"It's incredibly unfair and unjust," says Sen. Edward J. Kasemeyer, the suburban-Baltimore Democrat and Senate majority leader who has sponsored a bill to cut the rate.
It's also incredibly lucrative for the state treasury. In fiscal 2007 Maryland collected $118 million in interest on delinquent taxes, according to Comptroller Peter Franchot's office. That's more than proceeds from the state's alcohol and admissions taxes combined.
Not just corporations and crooks pay up. Most of the money - $73 million - came from people who owed individual income tax, says Franchot spokeswoman Caron A. Brace.
Anybody can get dinged. If you obtain a filing extension and don't pay income tax until late in the year, you're charged a 13 percent annual rate starting April 15.
"A lot of people are not aware of that," says Baltimore tax lawyer Caroline Ciraolo, who backs Kasemeyer's bill. "They think when they get an extension to file it's an extension to pay, too."
If you make a good-faith error on your return and correct it a couple of years later, you'll encounter the state's inner loan shark. Ditto if your tax pro messes up, or a medical emergency temporarily keeps you from paying what you owe.
Since many underpayments aren't discovered until years later, interest charges are frequently higher than whatever tax is owed, lawyers say.
"I don't think people realize how much it hits low- and middle-income taxpayers," says Steven M. Gevarter, a Columbia lawyer who has pushed Kasemeyer and other legislators to consider a change.
