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O'Malley Discusses Deal to Kill Computer Services Tax
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Leggett said he favors a repeal, partly because the planned tax significantly affects the thriving technology industry in the Washington suburbs. Leggett said, however, that he opposes raising the top personal income tax rate because a large number of wealthy Marylanders live in Montgomery and that he is wary of cuts to transportation funding.
"I want to be supportive of resolving this, certainly as it relates to this computer tax, but Montgomery County cannot be the sole source of solving a statewide problem," he said.
In 2005, 6,150 of the state's 2.6 million filers reported personal taxable income of more than $1 million, according to the comptroller's office. Of those, 2,535, or 41 percent, resided in Montgomery. The second highest total was in Baltimore County, which had 1,011 filers reporting more than $1 million. Ninety-four filers who reported income of more than $1 million resided in Prince George's County.
Sen. Richard S. Madaleno Jr. (D-Montgomery) acknowledged that the number of those who would be affected by the millionaires' tax is small. "But this is a class of people who generate a lot of tax revenue for Maryland and Montgomery County," Madaleno said. "To create a disincentive for them to stay would be damaging to the rest of us."
Opponents of the millionaires' tax also said it would hurt small businesses, many of which pay their business taxes on their owners' individual income tax returns.
But some of Montgomery's legislators said they favor a more progressive income tax structure, even if it has a disproportionate effect on their county's residents.
"I have to represent all my constituents, not just the millionaires," said Del. Tom Hucker (D-Montgomery). "I think those folks can afford to pay more state income taxes, especially in the wake of enormous federal income tax cuts that they have benefited from for the last six years."
Sen. Brian E. Frosh (D-Montgomery) said he thinks lawmakers should step back and consider whether raising the tax rate is good public policy, irrespective of the consequences for his county.
"I understand that people say it would hit Montgomery County harder than some other jurisdictions, but we don't get taxed by jurisdiction," Frosh said. "I don't perceive it as a geographic issue."
