Maryland Gov. Larry Hogan (R) on Wednesday promised legislation to shield state residents from paying higher taxes under the Republican tax plan approved by Congress.
The governor said his proposal would include ways to return to taxpayers any revenue that lands in state coffers as a result of Congress shrinking the amount of state, local and property taxes that can be deducted from federal income taxes.
“That’s my holiday gift to the people of Maryland,” Hogan said, adding that Comptroller Peter Franchot (D) is still determining the exact impact of the federal measure on state residents.
A leading Democratic lawmaker who is seeking to run against Hogan in November immediately denounced the governor’s idea, saying the state will need any new revenue it gets to offset the impact of federal cuts to health care and other essential programs.
The decision by Congress to cap state and local tax deductions at $10,000 is expected to hit residents of high-tax states such as Maryland, California, Connecticut and New York especially hard. Nearly half of Marylanders take the deduction, with the average amount being more than the proposed $10,000 limit, according to a recent analysis from the Government Finance Officers Association.
Hogan said the congressional plan would give the state “hundreds of millions of dollars” in new revenue because residents’ taxable income will increase when the federal government scales back personal exemptions and deductions.
“Our goal will be to leave all that money in the pockets of hard-working Marylanders,” the governor said. “I’m confident that our partners in the General Assembly who have expressed concern over the impact of the federal bill will support us unanimously in this legislation.”
Democrats have criticized the governor for not speaking out against the GOP tax overhaul as it made its way through Congress in recent weeks, noting that Republican Govs. Charlie Baker (Mass.), John Kasich (Ohio) and Phil Scott (Vermont) have opposed the proposal. The GOP plan would provide more relief to the wealthy than the middle class and working poor. Many of the breaks for individuals are set to expire by 2025, while cuts for corporations and other businesses are permanent.
Sen. Richard S. Madaleno Jr. (D-Montgomery), vice chair of the Senate Budget and Taxation Committee and a candidate for governor, said he is “extremely concerned” that Hogan “wants the people of Maryland to pay for the Republican Party’s tax scam.”
Madaleno agreed that Maryland would receive significantly more tax revenue under the federal plan but said the state would need that money to make up for possible reductions in programs such as Medicaid and the health-care exchanges put in place under the Affordable Care Act, which Republicans might overhaul to pay for the tax plan.
“His Republican colleagues have put us on a vicious cycle downward, and he’s trying to push us into that vortex,” Madaleno said. “I hope Governor Hogan will participate in rebuilding a fair tax code in our state.”