Maryland Gov. Larry Hogan, who vaulted to an upset victory in 2014 on a platform that promised tax cuts, is pushing for $400 million in tax and fee relief over the next five years.
It may sound big, but even Hogan (R) concedes it’s modest.
The governor is not offering his specific proposal until a formal announcement that is scheduled for Tuesday. But he said last week that the relief would benefit 1 million residents — a sixth of the state’s population — and 300,000 small-business owners.
On average, for those 1.3 million people and businesses, that’s $60 of tax relief a year for five years. It is but a fraction of the $8 billion in tax and fee increases that the state Department of Legislative Services says were put in place during the eight-year tenure of Hogan’s predecessor, Martin O’Malley (D).
Hogan prefers to say that under O’Malley, the average Maryland family had to pay $4,600 more in taxes and fees — a number that seems to come from dividing the total increase in the state budget during those years by the number of households in the state and does not separate out federal funding or taxes that are borne by businesses.
Regardless of which number you use, it is clear that Hogan’s plan will eliminate just a small chunk of the increased tax burden.
“It’s hard to see how this is going to have much individual impact on hard-working folks who are not making very much,” said Benjamin Orr, executive director of the Maryland Center on Economic Policy, which often criticizes Hogan’s policies.
Orr’s group is advocating for an earned income tax credit of up to $58 million a year, which could mean an average tax break of $163 for 355,000 low-earning people.
Hogan, a first-time officeholder who had a successful career in commercial real estate, said he is balancing his desire for tax cuts with his concern about budget deficits. He said his latest tax-
relief plan targets working families and retirees.
That caution could help him avoid blowing a huge hole in the state budget like the ones that have plagued Republican governors who have pushed big tax cuts in Kansas and Louisiana.
The tax plan will need support from the Democratic-controlled General Assembly, which will convene in Annapolis on Wednesday for the start of the annual 90-day legislative session. Last year, those lawmakers rejected Hogan’s bid to exempt small businesses from having to pay taxes on the first $10,000 worth of personal property.
Christopher Summers, president of the Maryland Public Policy Institute, wants Hogan to roll back all tax increases that were approved during O’Malley’s tenure, which spanned the national economic downturn that began in 2008.
But Summers, who served on Hogan’s transition team, said the governor is heading in the right direction.
“It is modest relief, but it is prudent,” he said.