Support is mounting in the General Assembly for a plan to replace Maryland's new computer services tax with an income tax surcharge on top earners, suggesting that the coming weeks could become a reprise of the debate that nearly scuttled November's special legislative session.
The chairman of the powerful Senate Budget and Taxation Committee said yesterday that he backs the plan. Senate President Thomas V. Mike Miller remained uncommitted on the idea, but House Speaker Michael E. Busch said yesterday that if the Senate passes the income tax increase proposed last week by Sen. Verna L. Jones of Baltimore, her bill would gain momentum in the House of Delegates.
"I support it," said Sen. Ulysses Currie, the Budget and Taxation chairman from Prince George's County. "There's a strong feeling that if we can find an alternative revenue source, we should repeal the computer services tax."
The debate came as technology tax opponents swarmed Annapolis for a day of rallies and hearings on a raft of bills that would repeal or amend a 6 percent sales tax on the computer services industry set to take effect July 1.
The Senate committee room in which the hearings took place was so packed that security guards locked the doors to prevent the crowd from becoming unmanageable.
Jones' bill would create two new income tax brackets for the state's highest earners: a 6.5 percent bracket for income over $1 million and a 6 percent bracket for income between $750,000 and $1 million. Currently, all income over $500,000 is taxed at 5.5 percent.
The tax increases would take effect July 1 and expire at the end of 2012.
Miller said an income tax increase won't pass without Gov. Martin O'Malley's involvement, but the governor has long favored a more progressive income tax.
"The governor will take a serious look at Senator Jones' legislation," said Rick Abbruzzese, a spokesman for O'Malley, who is a Democrat.
Jones' proposed income tax increase - which analysts estimate could bring in $230 million in fiscal year 2009 - could face strong opposition from Montgomery County lawmakers. The computer services tax is estimated to raise about $200 million a year.
Montgomery is a hotbed of opposition to the information technology tax, but it was also the objections of lawmakers from that county that scuttled attempts in November to raise income tax rates for top earners.
