Progressive and Adequate Fiscal Policy: Roy Appletree Team Leader
There was some discussion about the dual economy this pandemic revealed. While certainly an oversimplification, it revealed some truth to the maxim that “the rich get richer and the poor get poorer.” There was also a recognition that a sound revenue system must allow the State to invest in essential public goods such as education, transportation, and health care.
When the pandemic was recognized in March 2020, the revenue projections were for a dire shortfall. By December 2020 it was clear that Maryland was cushioned from any major shortfall. Come 2021 and the large sums of Federal relief funding, the State found itself in a solid position. As a result, all the tax legislation was allowed to die – combined reporting being the last to go.
However, the pundits expect fair taxation to be a major legislative issue in the 2022 session.
The Governor proclaimed he would veto legislation that mandates an increase in spending or taxes, especially considering the pandemic. One critical bill he vetoed was designed to continue implementing the Kirwan Commission reforms, the “Blueprint for Maryland’s Future.” The General Assembly overrode that veto. The legislature also passed several new taxes to pay for the Blueprint plan. These taxes included a tax on digital downloads such as Netflix and video games; a corporate tax change intended to bring in tens of millions each year; a new tax on vaping products and a doubled tax on cigarettes. They also passed a first-in-the-nation proposal to tax the targeted digital advertising on giant online platforms such as Facebook and Google.
All these tax bills were vetoed. LWVMD supported the eventual override of the digital download tax HB 932 .
We testified on these and several similar several bills:
HB0275 – Individual Income Taxes – Brackets and Rates which would raise rates on higher incomes.
HB0215 – Carried Interest which is often thought of as the loophole for private equity and hedge funds.
HB0172 – Combined Reporting which prevents corporations from shifting profits to other states to be taxed at a lower rate. This is in effect in many states and creates a more equal playing field for smaller, in-state businesses.
An Issue Paper entitled Progressive & Adequate Fiscal Policy was produced.