Sen. Donald F. Munson, a Washington County Republican, was the only GOP member to vote for the bill. He said he did so in part because he hoped the O'Malley administration would help persuade the House to reverse significant budget cuts to a higher education center in Hagerstown.
While no lawmakers spoke in favor the computer tax, some members of the Senate's tax committee argued for using budget cuts alone to compensate for its repeal, saying that the millionaires levy was effectively a tax against hundreds of small business owners who file personal income taxes rather than corporate income taxes.
"I just don't see how, at a time when we're unwilling or unable to move forward with the computer services tax, that we should move forward with another tax on small businesses," said Sen. Richard Madaleno, a Montgomery County Democrat who voted against the bill.
Warren Descheneaux, the General Assembly's top fiscal adviser, told the panel that the income tax increase would affect about 6,000 Marylanders with average annual incomes of $3 million. He said he did not know how many of those filers are businesses that pay personal rather than corporate income tax because they are operating as sole proprietorships or as "S" class corporations.
Earlier yesterday, after a Board of Public Works meeting, O'Malley said it "isn't unreasonable to ask those patriotic citizens to pay an extra percentage" on incomes over $1 million.
Lawmakers struck down an amendment proposed by Madaleno to scrap the millionaires' tax and instead take $150 million from the transportation fund.
Joseph C. Bryce, O'Malley's chief legislative aide, asked senators to resist that approach, saying the state's transportation needs were severe and could only withstand a small cut without affecting "nuts and bolts maintenance" and "system preservation."
AAA Mid-Atlantic spokeswoman Ragina C. Averella said in a statement that the $50 million annual cut would jeopardize the state's ability to maintain its roads and to cope with traffic congestion.
"While we recognize the financial crisis facing state legislators, hopefully, [legislators] will realize that raiding an already neglected Transportation Trust Fund is not the answer," Averella said. "Funding our state's transportation system is a critical need and we urge them to vote against this bill."
gadi.dechter@baltsun.com
Sun reporters Bradley Olson and Timothy Wheeler contributed to this article.
