As he had on the first days of the General Assembly session in January, Tom Loveland, an Owings Mills entrepreneur and co-founder of a lobby group dedicated to the tax's repeal, watched the lengthy proceedings yesterday from the visitors' gallery.
Three months ago, Loveland and his BlackBerry were alone in the balcony, and he considered the chances of a tax repeal "extremely low." But yesterday afternoon, Loveland was flanked by two of four lobbyists hired by the Maryland Computer Services Association, and he was joined for a few minutes by O'Malley, dressed in blue jeans, who was also checking out the floor action.
"Things are a little different now, aren't they?" Loveland said of the governor's newfound support.
House leaders spent much of the day lining up votes, both in the Ways and Means Committee and later on the floor, and as the day neared a close, many were pleased to be on the eve of a repeal.
The computer tax "would have branded us as an anti-high-tech state, and I'm very happy we've repealed it," Barve said. "It's one thing to make a mistake, but it's a very important to be able to recognize that and correct it."
Barve said the repeal bill was "not a perfect solution" but a good compromise.
Under the legislation, the $200 million sales tax on computer services, scheduled to take effect July 1, is replaced with about $110 million in annual revenue generated by a new income tax bracket of 6.25 percent for earnings above $1 million. The income tax increase expires after three years.
Those who will be subject to the tax earn on average $3 million a year and will pay an extra $17,000 a year under the surcharge, according to legislative analysts.
The bill also cuts $50 million from the state's $400 million Transportation Trust Fund for five years and directs the governor to trim an additional $50 million from his budget by July 1.
Democratic leaders employed a number of measures to sweeten the deal for delegates on the fence, including linking an additional $30 million for the Inter-county Connector, a long-awaited highway from Rockville to Laurel, to passage of the millionaires' tax.
In a repeat of last week's Senate debate, delegates rejected amendments proposed by Republicans and a Montgomery County Democrat, who tried to persuade colleagues to replace the millionaires' tax with reserves from the state's general fund. Montgomery is the state's wealthiest county and would be disproportionately affected by a high-earner's levy.
