Facing a Monday deadline to adjourn, Senate negotiators on Thursday evening offered a concession that appeared to bring within reach a budget deal and forestall increasing chatter in Annapolis of extending the General Assembly session.
Senate Budget and Taxation Committee Chairman Edward J. Kasemeyer (D-Baltimore County) said the upper chamber would ease away from plans for an across-the-board income tax hike in exchange for an even higher tax rate on six-figure earners than either the House or Senate previously approved.
In limiting a tax increases to high-income earners, the compromise plan would salvage a key requirement of House Democrats and move in the direction of the spending plan proposed by Gov. Martin O’Malley.
An across-the-board income tax hike had been seen as undermining the governor’s credibility to advocate nationally for a party line that the rich must pay a “fair share” to balance government budgets. That is a central tenet of President Obama’s 2012 platform, and one O’Malley has ascribed to in national appearances as surrogate for Obama.
But the compromise plan would also expose Maryland Democrats to charges of redefining high-income earners, and increasing taxes by the largest percentage on incomes that in the suburbs of the nation’s capital are largely seen not as rich, but as upper middle-class.
The state’s tax rate on singles making $100,000 and couples earning $150,000 would jump from 4.75 percent to 5.20 percent. With local add-ons, the combined state-local rate would increase nearly half a percentage to 8.4 percent.
Singles making $150,000 to $300,000, and couples earning $200,000 to $350,000 would see their taxes notch up another .25 percent.
And those making any more — including millionaires — would see their total combined rate top out at 8.95 percent.
As a percentage, that’s an increase of .25 percent, or less than those making $100,000.
The compromise plan would also lower personal exemptions that every Maryland taxpayer could claim by at least $200 per-person.
House Majority Leader Del. Kumar P. Barve said he doesn’t like the $200 in exemption reduction for people making less than $100,000, but said he was encouraged by the plan and tha the and colleagues would digest it.
Senate lawmakers also said they were ammenable to shifting a share of teacher pension costs to counties more quickly, as the House spending plan had done.
In all, the state’s new revenue package would raise about $300 million in new taxes, about the middle point between the House and Senate plans, but not enough for the state to fully fund its priorities without some additional cuts in coming years.