State Taxes

County needs help to deal with BRAC The good news about the national military base realignment is that we're getting thousands of new jobs at Aberdeen Proving Ground. The bad news is we're being stuck with the costs of providing infrastructure for tens of thousands of new people. Harford County is trying to shoulder these responsibilities but is being denied the tools needed to do the job. For example, Harford has already forward-funded schools just to keep up with current growth. The state government provides much less than is needed because of its own money issues, we're told.

The Maryland budget picture got even better yesterday as legislative analysts predicted the state will end this fiscal year with a surplus of more than $600 million.The projected surplus is in addition to the $320 million surplus the state accumulated in the last fiscal year, according to the analysis.The new figures, which were delivered to a committee of legislators and business leaders who set state spending limits, startled lawmakers who had grown seemingly accustomed to continually improving revenue statistics the past two years.

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15. See below for how to submit a question.I work in the District of Columbia, for the D.C. government, but I reside in Baltimore. For two pay periods my employer mistakely sent my state taxes to D.C. instead of to Maryland. What can I do about that and how do I report my income tax?Maryland and the District of Columbia have adopted a reciprocal agreement that allows your compensation to be taxed in the state of Maryland, even though it is earned in the District of Columbia.

WHAT will that wacky Donald Schaefer think of next?As Baltimore's mayor, he amused us by swimming with the seals at the aquarium.As Maryland's governor, he set tongues awagging with his scatological remark about the Eastern Shore.Now as the state's elected comptroller, he wants to turn mild-mannered Annapolis tax-collectors into pit-bull police enforcers.Comptroller William Donald Schaefer has hired his old pal Larry Tolliver to start cracking down on folks who don't pay their state taxes.

Michael D. Walls is the kind of guy who loves the new, more complicated Maryland tax form. He loves the separate calculations for state and local taxes, the 10 new lines, the four extra work sheets.Walls is not a sadist. He's a tax preparer, and business is picking up."Much, much busier," Walls said as eight customers sat waiting in his cozy brick office on Light Street in South Baltimore. "We're happy as can be about it."It's a different story elsewhere in Maryland. People filling out their tax returns are figuring out that the rules are different now for local and state taxes, requiring more arithmetic.

A citizen panel's proposed recommendation to raise county taxes to pay a whopping $417 million bill for school repairs is getting a cold reception from some lawmakers, who say county residents will never buy it, especially when there's a budget surplus."

The Maryland budget picture got even better yesterday as legislative analysts predicted the state will end this fiscal year with a surplus of more than $600 million.The projected surplus is in addition to the $320 million surplus the state accumulated in the last fiscal year, according to the analysis.The new figures, which were delivered to a committee of legislators and business leaders who set state spending limits, startled lawmakers who had grown seemingly accustomed to continually improving revenue statistics the past two years.

So by now you may have figured out that the new Maryland tax form can be a pain in the neck. The one-page "short" sheet is gone, replaced by a longer, headache-inducing form with different rates and sets of exemptions for state and local taxes.Well, next year the short form is coming back. Legislators have to file taxes, too, and they have passed a bill getting rid of the extra work sheets and calculations.It may be too late for this year's tax day, but for next April taxpayers can count on a one-page form.

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.Q: I'm going to have to pay estimated state and federal taxes for the coming year and I'd like to know how I start. Do I apply to the tax services or can I just send a check in?A: In order to pay estimated taxes, you must obtain IRS Form 1040-ES and Maryland Form 502D. For federal tax forms, call 1-800-829-3676 and, for Maryland forms, call 410-767-1985. The next step will be to determine the amount of taxes you will be required to pay. You can either project your 1998 federal and state taxes and pay 25 percent each quarter (the due dates are April 15, June 15, Sept.

In the tough years of the early 1990s, the states raised taxes that hit the poor harder than the affluent. Now that the booming economy has made the states flush with money, they are cutting taxes -- for the affluent.Sales and excise taxes, which fall more heavily on people at low income levels, were raised $11.7 billion from 1990 through 1993, data from the National Conference of State Legislatures show. These taxes have been cut by $200 million, or less than 2 percent of the amount of the increase, since 1994.

Baltimorean Ben Greene stopped at the glass door entrance on West Preston Street on Friday and couldn't figure out why the state office building was locked. The lights were off, but no signs were posted to explain the closure. "Did they run out of money or something?" Greene asked, perplexed. As a matter of fact, the state is running short of cash. Gov. Martin O'Malley decided to close offices around Maryland and kept about 70,000 state employees home without pay as part of a plan to save $75 million and help close a budget gap of more than $700 million.

In 1987, Maryland launched its "one and only" tax amnesty holiday for those who hadn't paid their state taxes. Shockingly, in 2001 it happened again, and yesterday Gov. Martin O'Malley and others were in Dundalk touting Maryland's third such effort in 22 years. What do all three events have in common? Here's a clue: It's all in the timing. At the time of each, Maryland was in the throes of an economic downturn, and elected officials desperately needed the cash to help balance a state budget awash in red ink. This year's effort may prove to be the most desperate yet. Unlike in 2001, the General Assembly approved the amnesty last spring without giving the state comptroller's office any money to manage, advertise or market it. And that's one reason why even the legislature's own analysts are assuming it will raise about $10 million compared with nearly four times that amount eight years ago. Tax amnesty is not necessarily a bad policy, at least not in moderation.

You don't have to own a Swiss bank account to evade taxes. Maybe you purposely underreport your income to the IRS or have gone along for years without filing a tax return. Or, you made a mistake significantly in your favor on the return and never fixed it. Whatever the case, it's not too late to make it right with the IRS. Uncle Sam prefers that you voluntarily come forward and pay what's due rather than having to track you down or, in serious cases, prosecute you. And while you're at it, you might need to make good on state taxes.

Mark Lecates took advantage of the "cash for clunkers" program about 10 days ago, getting $4,500 off the price of a new Honda Civic for scrapping his nearly 10-year-old Ford Explorer. He has no complaints, but he does have a question about Maryland taxes in the transaction. The Baltimore resident paid state taxes on the full cost of the vehicle - before $4,500 was knocked off the price. His tax bill on the sale totaled around $1,025. By paying taxes on the clunker incentive, Lecates figures he paid an extra $270.

Where did millionaires go? After reading Matthew Weinstein's rebuttal ("Millionaires ready to contribute," May 15) to Laura Smitherman's article ("Top payers fade away," May 14), I have to conclude that he has missed the point entirely. To argue whether taxpayers who earn more than $1 million are vacating Maryland is a sidebar to the real issue. The fact is, we are losing revenue because of a flawed economic policy. Raising income taxes on any group of citizens at the onset of a recession, and basing revenue projections off of nonrecession years, is a fundamental misunderstanding of economics.

Maybe it's just a different slant on the same old problem, but governing responsibly - and staying in office - seems ever more challenging. Take tax increases and "alcopops," for example. These not-so-obviously connected matters illustrate the challenge of addressing important public issues without damaging one's re-election prospects. In these matters, one thing leads to another - and no good deed goes unpunished. Gov. Martin O'Malley moved last fall to increase various state taxes.

Gov. Martin O'Malley and top General Assembly leaders met yesterday evening to develop a plan to repeal Maryland's new computer services tax, but they failed to reach a consensus on new tax increases or budget cuts to make up for the $200 million a year the tax is expected to generate. Although leaders in the Senate and House of Delegates declared they would work together toward a repeal, they found themselves no closer to agreement than they were after a similar meeting two weeks ago. The Democratic leaders discussed a range of options - including creating a higher income tax bracket for millionaires or using money earmarked for transportation projects - but made no steps forward.

The attorney general's office is trying two tactics today to block a Republican-led attempt to stop new state taxes from going into effect this week. This morning, the attorney general's office plans to appeal a Court of Special Appeals decision that upheld the right of attorneys for a group including five Republican lawmakers to get a deposition from House of Delegates Chief Clerk Mary Monahan. Monahan is scheduled to be deposed at 4 p.m. today in Easton. The Republicans filed suit in Carroll County Circuit Court last week, contending that the state Senate violated Maryland's constitution by adjourning for too long during the special legislative session without House approval.

It's not unprecedented for the state of Maryland to tax a private, for-profit company that's doing business on public land. In fact, the law allows it - which makes Anne Arundel County's ire at the loss of tax revenue from a planned private development at Fort Meade understandable. The relocation of thousands of federal jobs to Fort Meade will increase traffic on roads leading to the base, but officials seeking compensation must focus their efforts on the private developer, not the government.

County needs help to deal with BRAC The good news about the national military base realignment is that we're getting thousands of new jobs at Aberdeen Proving Ground. The bad news is we're being stuck with the costs of providing infrastructure for tens of thousands of new people. Harford County is trying to shoulder these responsibilities but is being denied the tools needed to do the job. For example, Harford has already forward-funded schools just to keep up with current growth. The state government provides much less than is needed because of its own money issues, we're told.