Tax Breaks

Many of us have heard about some of the tax breaks in the stimulus package, but the details have been skimpy. Readers have been e-mailing me questions seeking clarification, particularly on the first-time homebuyer's credit. This credit is a revision of one passed last year that was worth 10 percent of the home's price - not to exceed $7,500 - on purchases from April 9 last year through June 30 this year. The catch: The credit was really an interest-free loan that must be repaid over 15 years.

Maybe you've been on the fence about investing in a 529 college savings plan. You heard about high fees and how the tax benefits were going to disappear in a few years. And there are so many plans. Who has the time and know-how to choose one? It may be time to get off that fence. Fees have generally come down. Congress made the college plans' tax breaks permanent. And families now have a new tool designed to take the guesswork out of selecting a plan. With a college savings plan, you invest money in mutual funds where the cash grows tax-deferred.

Baltimore has collected its first profit-sharing check from one of the major development projects that got tax breaks from the city over the past decade to help spur economic growth. The Baltimore Development Corp. said yesterday that the city received $819,826 for fiscal 2006 from the Marriott Waterfront Hotel. The hotel was one of the first big projects that helped transform Harbor East from an industrial stretch of waterfront to an upscale urban neighborhood. The Sun reported in August that the city had yet to receive any payments from profit-sharing agreements linked to tens of millions of dollars in tax breaks for projects over the past decade.

Returning from its summer break last night, the Baltimore City Council picked up where it left off in June -- introducing bills to grant property tax breaks to two proposed downtown developments.The council introduced a Schmoke administration measure that would provide tax breaks for a proposed $124-million, 600-room Westin Hotel on the former News American site at 300 E. Pratt St.The second bill, also an administration measure, would benefit a planned $90-million office tower and parking facility on land owned by Baltimore City Community College at 600 E. Pratt St.They are the latest projects for which developers are seeking payments in lieu of taxes (PILOTs)

Consultants who get paid extra to negotiate bigger tax breaks for corporate clients have sparked concern among state ethics officials, who say the practice may violate laws banning contingency compensation for some people dealing with government.Even if consultant bonuses linked to tax breaks are found to be legal in Maryland, ethics officials are talking about changing state law to outlaw the practice."I'm troubled by contingent-fee compensation with respect to these [tax] incentive deals," said Donald B. Robertson, chairman of a state task force on lobbying practices.

A Baltimore judge refused yesterday to reconsider a ruling striking down millions of dollars in tax breaks for the planned Wyndham Inner Harbor East Hotel.Baltimore Circuit Judge Richard T. Rombro's decision to uphold his November ruling eliminating $75 million in tax breaks for the 31-story hotel sets the stage for a lengthy appeal, and possibly a campaign to alter state laws in the next General Assembly session.In rejecting a motion by the $134 million hotel's developers to reconsider the ruling, Rombro reiterated that "payment in lieu of taxes" (PILOT)

NEW YORK -- Bertelsmann AG, the third-largest media company in the world, has decided to walk away from $28 million in tax breaks for the new headquarters for its Random House publishing division rather than comply with a last-minute city request to conduct a full environmental review of the $300 million project.Nonetheless, the company will proceed with construction of the 31-story tower on Broadway, between 55th and 56th streets.The company has spent more than two years looking for a suitable location, and a year negotiating with city officials over an incentive package.

The Baltimore City Council gave preliminary approval last night to a proposal to convert a Charles Street apartment building into a senior citizens' home, displacing its 150 occupants.Under the proposal, which will be up for final approval next week, the Northway Apartments at 3700 N. Charles St. would become a home for the elderly that would offer assisted living.Tenants are protesting the change, saying it will push middle-income residents out of the city and that nursing homes in the area are not fully occupied.

WASHINGTON -- Critics of the tax-cut bill took mostly broad swipes at the measure yesterday, but one particular provision really ruffled their feathers: a tax credit for chicken manure."

A nonprofit group proposing to build 345 apartments, dozens of stores, a multiscreen theater and parking garages on the west side of Baltimore's downtown wants tax breaks from the city to help pay for the project, according to details released yesterday.The Harry and Jeanette Weinberg Foundation is also asking the city to reopen a pedestrian-only section of Lexington Street to traffic and remove dozens of lighted arches over Howard Street, according to the proposal.City officials have not decided whether to approve the proposal.

Shelbyville, Ind. -David Cordish hopes Marylanders wary of his plans for a casino at Arundel Mills mall will be seduced by the extravagant refinement of Indiana Live!, his firm's first developed-and-operated casino, where the Baltimore builder presided over a glittery grand opening Friday night. A capacity crowd of 8,000 jammed the casino floor for hours. They stood in winding lines for access to corporate-branded restaurants such as a Maker's Mark steakhouse and glitzy nightclubs designed for the 233,000-square-foot facility, and clogged the highway in and out of Shelbyville, Ind., population 18,000.

Many of us have heard about some of the tax breaks in the stimulus package, but the details have been skimpy. Readers have been e-mailing me questions seeking clarification, particularly on the first-time homebuyer's credit. This credit is a revision of one passed last year that was worth 10 percent of the home's price - not to exceed $7,500 - on purchases from April 9 last year through June 30 this year. The catch: The credit was really an interest-free loan that must be repaid over 15 years.

For the most part, Americans earning less than $200,000 a year figure to get a tax break once Congress puts the finishing touches on the stimulus package. Many workers would get a little more in their paychecks. Homebuyers are likely to get a credit worth thousands of dollars. Laid-off workers would get help with their health insurance. And parents could be in line for a bigger refund. Having passed versions of the measure in both the House and Senate, lawmakers now must work out the differences and come up with a compromise bill to send to President Barack Obama.

WASHINGTON - With U.S. auto sales falling near a 27-year low, the Senate gave its approval yesterday to a proposal by Sen. Barbara A. Mikulski to provide tax breaks to purchasers of new cars and light trucks. The Maryland Democrat's measure, which raises the price tag on the Senate's version of the economic stimulus package to almost $900 billion, would apply only to new vehicles purchased this calendar year. Mikulski said her plan "actually creates jobs" by stimulating employment in car making, sales and service.

Whatever the ultimate dispositions of the criminal cases against Mayor Sheila Dixon, City Councilwoman Helen L. Holton and developer Ronald H. Lipscomb, it is clear that something needs to be done to diminish the corrosive combination of development, money and politics. While it may be impossible to prevent developers from secretly lavishing cash and gifts on politicians or paying for political polls - as Mr. Lipscomb is alleged to have done for, respectively, Ms. Dixon and Ms. Holton - steps can be taken to counter the widespread pay-to-play perception when it comes to major city real estate and construction projects.

The mega-bailout package for Wall Street also contains about $150 billion in tax breaks for the rest of us. Some are new, but many are tax breaks that had either lapsed or were near expiration and given another year or more of life. Among them are credits for buying an electric car, deductions for college tuition and changes that will spare millions of families from the alternative minimum tax. Your broker will have new reporting requirements when securities are sold, but that might end up costing you more in taxes.

WASHINGTON - The Senate voted reluctantly but solidly in favor of a modified $700 billion Wall Street rescue plan last night, but it remained uncertain whether the legislation - even with a carefully designed package of tax breaks - would withstand the fierce crosswinds of liberal and conservative resistance in the House later this week. The measure passed the Senate 74-25, with a majority of Democrats and Republicans voting in favor - among them presidential nominees Barack Obama and John McCain.

WASHINGTON - Senate leaders scheduled a vote tonight on a $700 billion financial bailout package after agreeing to add tax breaks and a higher limit for insured bank deposits in a bid to attract enough votes to reverse a shocking defeat in the House and send legislation to President Bush by the weekend. After a day of behind-the-scenes maneuvering, top lawmakers said the Senate proposal would include a tax package that had been caught in a stalemate with the House, as well as a plan endorsed yesterday by both major presidential candidates and the Bush administration to raise government coverage for bank deposits.

Del. Keith E. Haynes informed the Howard County Department of Finance yesterday that he was returning five years of property tax discounts he improperly received under the Homestead Tax Credit program. Haynes was one of several legislators identified in a Sunday Sun article as getting tax breaks for "principal residences" in which they did not live, or for having multiple properties designated as primary residences. The Baltimore Democrat got tax breaks for a Columbia home he owns because it was listed as his principal residence.

Several state legislators have been receiving thousands of dollars in undeserved property tax breaks under the Homestead Tax Credit program, records show. In some cases, the lawmakers have reduced their tax bills on "principal residences" even though they don't live there. Others have been getting tax breaks on multiple homes, a duplication forbidden under the law. The lawmakers, identified through a Sun review of public records relating to all Baltimore-area delegates and senators, said they did not intend to take advantage of tax credits and other financial benefits they did not deserve, and one immediately took steps to rectify the situation.