Marylanders struggle to get fair tax legislation enacted

In his speech at a rally in Baltimore on June 12, President Barack Obama stressed the importance of fair taxation. “Back in 2008…we had a record surplus that was squandered on tax cuts for people who didn’t need them and weren’t even asking,” said the president, referring to a set of tax cuts made during the George W. Bush administration. Taking aim at his Presidential election opponent, Obama continued, “When Governor [Mitt] Romney or the Republicans controlling the House of Representatives propose cutting taxes for folks who don’t need them while raising them on 18 million working families, that’s not a recipe for economic growth.”

Locally, Maryland governor Martin O’Malley has endorsed fair tax proposals, and groups like Progressive Maryland have made significant lobbying efforts in support of the measures. Despite this, and the state’s position as a high-income, “blue state”, with two Democrats for every Republican, the 2012 Maryland General Assembly failed to pass any budget in its contentious regular session – with a fair tax proposal or otherwise.

When the 188 state legislators were recalled to Annapolis in mid-May for a special budget session, Progressive Maryland members and allies were waiting. They vociferously demonstrated to demand tax fairness and “no doomsday cuts” outside the state Democratic Party’s Annual Gala and around Annapolis.

Progressive Maryland supporters protest at the Democratic Annual Gala (top) and in Annapolis (bottom). (Photos by Herb Ettel)

“The action brought together many activists from diverse backgrounds and communities seeking to make government more accountable.,” said one participant, Kristen Welker-Hood of Columbia, Md. “When we pull together as a people and show our power in numbers, we can overcome the power of money, and make elected officials take notice”, she concluded.

As one specific measure, Progressive Maryland had urged the institution of “combined reporting.” This requires corporations with subsidiaries in multiple states to pay taxes on profits made by doing business in Maryland, in the form of state income tax. Combined reporting, already mandatory in 23 states, would close the tax loophole that allows big, multi-state corporations like Verizon, Pizza Hut and Starbucks to pay no income tax to Maryland. Critics argue that these loopholes give corporations unfair competitive advantage over small businesses and local chains in Maryland. The group also advocates for the reinstatement and rate increase of Maryland’s just-expired “millionaires’ tax” (previously a mere 0.75 percent higher on income above $1 million).

The special session declined to enact either combined reporting or the “millionaire’s tax.” Based on current budget numbers, the decision represents a missed opportunity to raise nearly $200 million in additional tax revenue per year average, which would help preserve vital state services.

Progressive Maryland members are  celebrating a partial victory, however, as lawmakers finally passed a fiscal 2013 budget. This will increase state revenue by $264 million, raise income tax rates on the top 14 percent of earners, and boost local funding by $67 million. The Baltimore Sun reported that the budget “completes a spending package that will undo a so-called Doomsday budget that would have cut into Democratic priorities like education and health care. The tax increase will hit roughly 300,000 taxpayers — individuals who make more than $100,000 and joint filers who earn over $150,000.”

Dana Beyer, who serves on the steering committees of Progressive Working Group and Progressive Neighbors, two groups that fought alongside Progressive Maryland, observed, “While the convoluted and complex budget deal left much to be desired, the changes to the income tax structure are a significant improvement toward progressivity and fairness.”

“Maryland still faces budget shortfalls for each of the next four years,” added Kate Planco Waybright, Progressive Maryland’s interim executive director. Striking a defiant note, she continued, “But Maryland progressives will keep mobilizing grassroots pressure until we’ve reinstated the millionaires’ tax, closed corporate loopholes, and achieved true tax fairness in ‘the Free State.’”

Herb Ettel works with Progressive Maryland.