Legislation moving rapidly through the Maryland General Assembly that would offer a break on the estate tax has divided the Democratic candidates for governor, with one urging Gov. Martin O’Malley (D) to veto the bill.
The House of Delegates approved the legislation 119 to 14 on Friday, and the Senate is likely to follow suit in coming weeks. Senate President Thomas V. Mike Miller Jr. (D-Calvert) has touted the bill as a way to counter Maryland’s reputation a place where you want to “leave the state before you die.”
Maryland’s estate tax is imposed on the transfer of property valued above $1 million after someone dies. The legislation would provide relief by gradually raising the $1 million exemption to match that of the federal government, which is $5.34 million this year (and scheduled to rise with inflation in coming years). The bill would eventually cost the state more than $130 million a year in lost tax revenue, according to legislative analysts.
During debate on Friday, Del. Heather R. Mizeur (D-Montgomery), who is running for governor, called the bill a “giveaway to millionaires” and said it is “unfair economic policy that exacerbates the income gap that already exists in this state.”
According to an analysis of the bill by legislative staff, about 1,100 estates a year in Maryland are subject to the state-level estate tax. About 3 percent of those who die each year have an estate-tax liability.
“It’s conservative propaganda to suggest we have to pass this bill to hold on to millionaires in Maryland,” said Mizeur, who later issued a statement urging O’Malley to veto the legislation if it reaches his desk.
Lt. Gov. Anthony G. Brown (D), a leading candidate for governor, also expressed reservations about the bill on Friday, saying in a statement that he doesn’t like “a piecemeal approach to tax reform.”
“While I don’t see the need in the foreseeable future to raise taxes, I do see the need for comprehensive tax reform that allows us to make the necessary investments in infrastructure and human capital, while ensuring a tax code that reflects our progressive values and our modern economy,” Brown said.
Attorney General Douglas F. Gansler (D), however, said he was pleased with the House action, which was supported by a strong majority of Democrats and Republicans, many of whom called it overdue.
“Today’s vote overwhelmingly affirms what I have been hearing from the people from Maryland for quite some time now, and it is why back in August I proposed we take this step,” Gansler said. “Maryland should be a state that holds on to its retirees, where generations stay and grow future generations.”
O’Malley, meanwhile, did not take a definitive stand on the legislation Friday.
Asked if the governor has a position on the bill, O’Malley spokeswoman Nina Smith said: “We are eager to continue working with the General Assembly on reform ideas that will make our state even more competitive, without hurting our ability to invest in key priorities like our number one schools, keeping college affordable, and creating new innovative jobs.”