House plan would cut Senate income tax hike in half

March 19, 2012|By Michael Dresser, The Baltimore Sun

A budget plan moving through the House of Delegates calls for an income tax increase of less than half the size of the hike passed by the Senate last week and would spare taxpayers who make less than $100,000.

A House committee approved amendments Monday to the Senate tax bill that would have raised about $473 million in order to avoid deep cuts to programs suchh as education and health. But the House plan calls for deeper spending reductions and would raise about $200 million in new revenue each year.  

The House plan combines elements of the Senate proposal and the governor's original tax plan. Like the Senate, the House would increase income tax rates -- but only on those making more than $100,000. Each bracket above that level would see a quarter-point increase.

The House plan also revives part of Gov.Martin O'Malley's original tax proposal, phasing  out exemptions -- but not deductions, as the governor proposed -- for taxpayers making over $100,000.

The House plan junks the so-called "super-bracket" tacked on to the Senate bill just before its passage. That provision, which would have taxed every dollar earned by people making $500,000 at the highest rate, was described as "bizarre" by House Majority Leader Kumar Barve, who said he knew of no place on earth that taxes income in that manner.

The plan also scraps the so-called "" tax, in which the Senate attempted to gain some revenue from online merchants who avoid the state's sales tax. Subcommittee members concluded the extra revenue wasn't worth the risk that Amazon and other online companies would dump local affiliates in order to avoid the tax.

Health advocates won a victory as the panel voted to match the Senate's increase in the tax on small cigars of the type favored by many young people from 15 percent to 70 percent. The subcommittee also voted to raise the tax on snuff, which the Senate would have raised to 20 percent, from 15 percent to 50 percent. The House plan drops the Senate's provision raising the tax on premium cigars from 15 percent to 20 percent.

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