ALLIANCE FOR TAX FAIRNESS
"Investment in Maryland's Future"
Working Families Win in Special Session:
Assembly Creates Fairer Income Tax, Preserves Most Vital Public Investments, Expands Health Care
More work ahead to close corporate tax loopholes to increase investment in health care and schools
The General Assembly in November 2007 enacted an historic overhaul of the state's regressive income tax system, making the income tax code more progressive, asking corporations to pay a fairer share of taxes, protecting most vital public investments, and actually expanding health care coverage. While the package contains some regressive elements, such as an increase in the sales tax, those are outweighed by progressive income tax reform, an overdue increase in the corporate income tax rate, and preservation of the public sector. This package is a win for working families.
Preservation of public sector investments is a virtue of the package too easily overlooked. Blue-collar families rely more on government services than do the wealthy. Regular folks don't live in gated communities, that's why they need safe streets; they have trouble affording health insurance, that's why they need government to step in and correct this market failure; they don't belong to country clubs, that's why they need good parks; they don't go to private schools, that's why they need world-class public schools. The fiscal package -- which passed thanks to years of hard work by Progressive Maryland and allies as well as inspired leadership by Gov. Martin O'Malley and legislative leaders -- preserves Maryland state government from draconian budget cuts. And in the future the package could generate even more new revenue to expand health care coverage and for other goals.
The product of compromise, this huge reform is of course not perfect. It contains $550 million in spending cuts, hurting a number of important services. Lawmakers need to implement more targeted relief for the poorest taxpayers, such as a sales tax credit. And for reasons we can't understand, the State Senate decided to let off scot-free many giant multistate corporations that pay no state income tax by failing to enact combined reporting, the proven reform that comprehensively closes tax loopholes. PM and allies will keep fighting for that long-overdue reform, and we will win. (Read Progressive Maryland news release and Baltimore Sun article). Key elements are:
- Raises $1.3 billion in additional revenues
- Reduces income taxes for most Marylanders by raising the personal exemption from $2400 to $3200
- Makes the income tax fairer with higher rates for the wealthiest (up to 5.5%), ending the essentially flat tax (now 4.75%) that existed for 40 years
- Raises the corporate income tax rate from 7% to 8.25%
- Increases the sales tax from 5% to 6%
- Doubles the cigarette tax to $2 a pack
- Expands Medicaid coverage to more than 100,000
- Provides $404 million a year for transportation projects
- Provides $50 million for Chesapeake Bay cleanup
- Puts slots on the November 2008 ballot for voters to decide
Mid-session floor votes on the House and Senate tax bills:
Hundreds Demand Tax Fairness at Alliance Town Meeting
Progressive Maryland's Matthew Weinstein (top photo) and Henry Bogdan of Maryland Budget & Tax Policy Institute (lower) explain policy proposals to hundreds packing the room at Alliance for Tax Fairness Town Hall Meeting Nov. 6 at Annapolis Elementary School. See "Top Ten List of Urgent Needs" and Fox TV-45 report.
The Alliance for Tax Fairness was created earlier this year to support solutions to the state fiscal crisis that accomplish two goals:
Generate enough new revenue to go beyond just plugging the $1.7 billion budget hole so we can make long-delayed investments in education, health care, Chesapeake Bay cleanup, and other areas that are critical to Maryland's future.
Generate new revenues in ways that are fair. Low- and middle-income working families and retirees should not bear the brunt of tax increases when upper-income households and large, out-of-state corporations pay some of the lowest effective tax rates in the nation.
With your help, we will educate and involve the public to have a voice in solving this crisis that threatens Maryland's future prosperity and quality of life.
Please note: The Alliance For Tax Fairness is a broad coalition of groups working together to achieve these goals. Different organizations in the coalition hold different positions on specific revenue options. The material presented on this website is educational only and is not necessarily endorsed by all members of the coalition.
Learn more about progressive tax reform from Progressive Maryland's:
Alliance lists 'Top 10 Unmet Needs' at Oct. 30 news event
Matthew Weinstein (above, center), Progressive Md. Baltimore Regional Director, unveils Maryland's "Top Ten Unmet Needs" at the Alliance news conference Oct. 30 on Lawyer’s Mall outside the State House in Annapolis. Many press attended (below).
- Assembly Passes O'Malley Budget Plan, Adds $1.3 Billion Revenue, Cuts $550 Million, The Baltimore Sun, Nov. 19
- What Fairness Requires, The Baltimore Sun Editorial, Nov.16
House offers $500 million in cuts to negotiate with Senate, Baltimore Sun, Nov.14
O'Malley Promise Erased: Lawmakers remove breaks, Baltimore Sun, Nov. 13
- Promise Erased: Lawmakers Remove Breaks, Baltimore Sun, Nov.13
- Events Calendar
- Printable: Release, brochure, Top Ten Unmet Needs.
- Fox video: Scroll down Video List on right to 'State Town Hall Meeting'
- Read the poll results 5-page summary
- See the poll results slides and charts [PowerPoint or PDF]
- Reality-based Budgeting, The Baltimore Sun, Oct.19
- What You Should Know About Maryland's Budget Challenge
- Big Maryland Firms Should Disclose Tax Payments, Baltimore Sun, Oct. 7
- Maryland’s Role in “Making Ends Meet”: A Town Hall Meeting to Discuss Challenges Facing Marylanders, Oct.23 at PGCC
Matthew Weinstein addresses leaders of 53 groups at a Sep. 10 Alliance meeting
Alliance For Tax Fairness' Public Opinion Poll on Budget and Taxes
Maryland state government faces an approximately $1.5 billion deficit next year and for years to come. As solutions, lawmakers have focused mostly on cuts and only enough revenue increase to plug the fiscal hole. The Alliance for Tax Fairness was formed to advocate for a a different, fairer approach that does not unduly burden middle-class families and locally-owned businesses. That's the approach favored by a solid majority of Marylanders according to a June 2007 poll of 500 registered Maryland voters, the Alliance released at its July 25 news conference in Annapolis. The poll evaluated residents’ concerns about the state budget deficit, taxes and spending levels, and revenue increase that could balance the budget and pay for new investments. Take action now!
Poll finds Marylanders want a fundamental fiscal overhaul, not just a deficit solution:
- 69% are willing to see the state invest more resources in Maryland's priorities “even if taxes are increased to pay for it.” This support even transcends the usual regional differences, with 70% of Eastern Shore/ Southern Maryland residents and 67% of Western Maryland residents in agreement.
Large majorities (60% and up) say that it is time for Maryland to invest more in improving K-12 education, ensuring affordable healthcare, and protecting our natural resources and clean water.
74% agree that Maryland lawmakers should propose a budget that includes
“more than the tax increases needed to close the budget deficit” to pay
for needed initiatives.
62% agree that "lawmakers should go beyond plugging the hole in the budget and create a fairer tax system that asks the wealthiest corporations and individuals to invest in Maryland’s future.”
The poll finds that the most popular revenue measures are the fairest:
87% favor reforms that would compel all corporations who make a profit
in Maryland to pay at least some income taxes on that profit
68% favor a “millionaire’s surcharge” for those who make more than
$500,000 a year in income. Even among those who themselves make $150,000
or more in household income, 57% favor this idea, demonstrating that upper
income Marylander's are ready and willing to give something back to create
a better future for all Marylanders.
63% support increasing the income tax rate to 6% for households with
incomes greater than $225,000 a year. Again, even the wealthiest
Marylanders whom this would affect are strongly in favor of this measure.
Maryland taxes corporate income and income of highest-earning individuals at some of the lowest effective levels in the country, yet we have many unmet needs in funding education, health care, and protecting the environment. Lawmakers should go beyond plugging the hole in the budget and create a fairer tax system that asks big corporations and individuals to invest in Maryland's future.
Multi-state corporations exploit tax loopholes to avoid paying Maryland taxes. That puts local businesses at an unfair disadvantage. Maryland should make sure big corporations cannot hide their profits and instead make them pay their fair share.
President George W. Bush has handed the wealthiest people in Maryland large federal tax cuts. It's only fair we ask them to invest some of that in Maryland's future.
CONTACT YOUR LEGISLATORS
Resources to Learn More:
- Income Tax Fact Sheet
- Corporate Tax Fact Sheet
- Maryland Fiscal Crisis Briefing Book (Fall 2007)
- AFT Townhall Meeting Ballot 11-6-07: Revenue Package / Revenue Sources
- Montgomery County And Tax Reform (less than 15% to pay more)
- Reality-based Budgeting, The Baltimore Sun, Oct.19
- State Government As Tax-Dollar Shredder? A critique of Ernst & Young's Economic and Fiscal Impact Analysis of Maryland Tax Policy Options as released by the Maryland Chamber of Commerce
- Progressive Maryland Slams E&Y Report on Impact of Tax Changes, Washington Business Journal, Oct. 2
- PM LETTER: Chamber's Report Serves Its Agenda, The Daily Record, Oct. 5
- Progressive Maryland: Tax study discounts state spending, Daily Record, Oct.2
- Factsheet: Combined Reporting (MaryPIRG)
- Factsheet: Md. Fiscal Crisis (League of Women Voters)
- Read the news release about the poll results
- Tax Fairness and Corporate Loopholes
- Read the letter 14 Senators wrote to Governor O'Malley
- View the MBTPI slideshow on the state fiscal crisis
- Hear Matthew Weinstein's response about business taxes on WYPR
- Hear Progressive Maryland on WYPR radio's "Maryland Morning"
- Groups Propose Ideas on Deficit, Baltimore Sun, Aug.5
- Progressive Maryland's Testimony on closing corporate tax loopholes
- Silver Bullet report on how to wipe out Maryland's structural deficit and pay for all school and community college construction.
Alliance for Tax Fairness member organizations:
Disclaimer: This site features a wide range of research that makes the case for progressivity and that discusses various specific means of achieving greater tax fairness. Not all members of the Alliance for Tax Fairness have endorsed specific proposals that are discussed on this site.