Support for:

  1. An equitable and efficient fiscal structure for Maryland.
  2. Improvement of the fiscal relationships between the state and its political subdivisions.
  3. Supporting or opposing proposed changes to Maryland’s revenue structure by using the following principles to analyze and evaluate the proposed changes:
    • a. a progressive income tax which should be the first choice if a revenue increase is necessary.
    • b. a sales tax with exemptions to decrease regressivity.
    • c. a motor vehicle fuel tax on a per gallon basis to be used for transportation, with measures included to protect the environment.
    • d. the distribution of state funds to local governments in a variety of ways,  based on factors such as population, need, wealth, and tax effort.
    • e. reduction of the number and complexity of equalization formulas used by the state to distribute money to local governments.
    • f.  statements of intent and periodic review by the legislature of all state-funded programs.
    • g. permitting legislative reallocation of expenditures within the official state revenue estimate or the Governor’s budget proposal.
    • h. fiscal restraints which promote good fiscal planning and allow for proper budget procedures.
  4. Support for use of the following principles (no single revenue source will meet all principles), with principles a through c the most important and d through f more important than the others.
    • a. Adequate yield: Adequate and timely revenues are available to finance planned expenditures.
    • b. Equity/Fairness: The ability-to-pay principle defined as a progressive tax – a graduated tax which will collect a greater percentage of income from those with higher income than from those with lower incomes; e.g., a graduated income tax with a series of rates and income brackets.
    • c. Compatibility with state social and environmental policy: The state’s policy and tax structure are working toward the same ends, not at cross purposes.
    • d. Cost effective administration: Collection costs are low relative to the yield.
    • e. Elasticity/natural growth: As the economy, the population and/or inflation grows, the revenue system will grow naturally at a similar rate in order to maintain a constant level of services.
    • f.  Equity/Fairness: The benefit principle means a tax or fee will be levied in proportion to the benefit received, e.g. user fees, college tuition, and dedicated taxes. Use of this principle must include an assessment of the impact on low-income people.
    • g. Simplicity: The revenue source is easy to understand.
    • h. Certainty: The tax is difficult to avoid.
    • i.  Public acceptance: The political will exists to impose the tax of fee and the public’s willingness to comply is evident.
    • j.  Compatibility and links with federal policy: Maryland’s budget includes a significant amount of federal funds; the state income tax is pegged to the federal income tax; several other smaller taxes also piggyback on their federal counterparts; and some state taxes are deductible at the federal level.
    • k. A competitive business climate: The state’s policy and tax structure will not adversely impact on-going businesses, or where businesses locate. The costs of inducements, such as tax credits, to businesses to move to or to remain in the state will be considered in the light of Maryland’s overall competitiveness and attractiveness. Accountability for the cost of inducements and their results must be included in this policy.

Opposition to: 

5. Any constitutional amendment proposed to limit state taxes and spending.

6. Tax or spending limits imposed by the state on local governments.

See “Education – Financing Education” positions, page 40 for related support positions.

Background: Promoting a sound economy and maintaining an equitable and flexible system of taxation are among the League’s basic principles. Maryland League members have, since the 1950s, understood the importance of the relationship between various revenue sources available to state government and the services provided by those revenues.

Members reached a position for a more progressive income tax and a less regressive sales tax in 1961. That issue was revisited in 1971 and 1976, and in a 1985 LWVUS study. When the Legislature revised income taxes in 1987 and 1988 in response to federal reforms, the League testified for increased personal exemptions and other measures to increase progressivity. The effort was partially successful. The League also supported the federal government’s proposed redefinition of capital gains as “ordinary income”, but this did not succeed.

The use of income tax revenues to fund education was affirmed in the 1973 Financing Education study. A comprehensive study of state fiscal policy was adopted in 1975 stressing relief for certain homeowners and renters.

LWVMD supported the existing sales tax in 1959 because it provided revenue to support essential services and because it contained an exemption for food and medicine, rendering the tax only mildly regressive. In 1966 and 1976 members favored use of exemptions to make the tax less regressive. Also in 1976, LWVMD first considered the state’s motor vehicle tax. Inflation and the need to repair the transportation infrastructure prompted a tax increase in 1982-83, which was supported by the League. The fuel tax and registration fees were increased in 1987.

The “tax revolt” and tax limitations adopted by four Maryland counties prompted the 1979 State Convention to adopt “a study of the effects of legal restrictions on state and local governments’ spending and taxation.” Members decided that the existing controls should be rigorously enforced and refused to limit taxes or spending, deeming such methods both inflexible and impractical. They feared the impact such constraint would have on the state’s credit rating. In 1982 LWVMD opposed bills which would have limited state spending to the percentage increase in total personal income in Maryland. The League also supported the creation of the Spending Affordability Committee, which gives lawmakers an indicator of responsible state spending, but whose recommendations are not legally binding.

In 1991, 1992, and 1994 the League testified in favor of a more progressive income tax and for a more efficient and equitable state/local fiscal structure. At the 1996 and 1997 sessions, LWVMD supported failed efforts to create a more progressive state income tax. Several income tax bills were introduced in 1996, which LWVMD opposed: all failed. LWVMD also opposed 1997 bills which would have reduced income taxes, as regressive. Despite our opposition, a 10% income tax reduction was enacted.

In 1999, the League adopted criteria to evaluate state revenue sources, which were used to support or oppose 26 tax bills in the 1999 General Assembly session.


  • Supported accelerating an increase in the state's refundable earned income credit for low-income working families and the option for counties to grant a refundable credit. (2000 – Achieved)
  • Opposed two bills to accelerate the already enacted state income tax reduction; (2000 – defeated)
  • Supported legislation that would require accountability by companies receiving state monetary incentives. (2000—defeated)
  • Supported further expansion of the refundability of the state and county earned income credit. (2001 – achieved)
  • Opposed two bills: 1) a constitutional amendment to refund to taxpayers (excluding low-income taxpayers) General Fund revenue surpluses; and 2) a proposal that would require property tax revenues be returned to local districts based solely on property values. (2001—defeated).
  • Supported a bill to create the Commission on Maryland’s Fiscal Structure to study ways to fix Maryland’s structural fiscal deficit. (2002 – achieved. The Commission, including a League member, met for a year, but was disbanded in 2003.)
  • Supported an increase in the tobacco tax. (2002 – defeated).
  • Opposed, in coalition with, slots on the basis of inadequate yield, equity/fairness and compatibility with state social policy. (2003-07 – defeated).
  • Opposed sales tax increases. (2003 – defeated)
  • Supported increases to alcoholic beverage tax, motor fuel tax and income tax. (2003)
  • Supported corporate tax reform and continuation of the historic structure rehabilitation tax credit. (all defeated or vetoed).
  • Participated with Alliance to Invest in Maryland (AIM) to find revenue sources to support state services.
  • Supported reform of taxation of corporations in Maryland. (2004-05)
  • Supported, in principal, a bill that would expand the sales tax to services and a more progressive income tax. (2007 – not achieved)
  • Supported the creation of a task force that would study the needs and expenditures of state programs. (2007 – not achieved)
  • Supported an increase in the alcohol tax and in the gas tax as well as combined reporting for corporations. (2009 – not achieved)
  • Supported increase of 6%-9% in the alcohol tax, effective July 1, 2011. (2011 - achieved)
  • Supported combined reporting and an increase in the gasoline tax rate. (2011 - not achieved)