From Friends of David R. Craig:
Harford County Executive and candidate for Maryland governor David Craig announced his plan for a sweeping reform of the individual income tax code that would save taxpayers $2.55 billion in a phased-in approach that puts the state on a glide path toward eliminating the tax altogether. He also previewed further announcements that will roll back the O’Malley- Brown tax and spend legacy.
“The citizens of Maryland now have an opportunity to vote themselves a raise,” said Craig, referring to the individual income tax cuts. “My proposal will jump start economic growth, keep families together by stopping the mass exodus of Marylanders leaving to other states and unleash a flurry of new business start-up activity.”
In the first phase of the income tax reduction that would take effect in 2016, Craig will lower tax brackets to 4.25% for earners across income levels. The personal exemption will increase from the current $3200 to $5000. The savings to taxpayers will be $600 million with an average savings of $352 for married couples or $176 for individual filers.
After monitoring the effects on revenues combined with achieving cost-savings in the budget, Craig would then further reduce income taxes to a flat 3% before the tax is phased out entirely. This would result in a savings of $2.55 billion for taxpayers in the aggregate and $1500 for married couples or $750 for individual filers.
Combined with these proposals will be reductions in Maryland’s budget which has increased from $28.8 billion in actual spending in 2007 to $39.2 billion proposed for fiscal year 2015, a spending increase of 36% over seven years. The state will be able to afford these tax cuts through a variety of budget reforms including zero-based budgeting, reviewing department and agency operations, eliminating coordinating offices of the Governor and accounting for dynamic growth through increases in disposable income that will lead to greater sales tax revenues and an expanding tax base among other heightened economic activity.
“We must re-think the proper role of government in Maryland,” said Craig. “For too long the status quo has gone unchallenged and people are not seeing a return on investment on a range of issues including education, health care public safety and transportation. Are we really better off with over 70 tax, fee and toll increases than we were just seven years ago? Are the schools better, are the roads better, and are we better able to obtain health care or keep neighborhoods safer in 2014 compared to 2007?
In widely-publicized figures from federal government sources, Maryland lost 31,000 taxpayers between 2007 and 2010, more than any other surrounding state and 7th highest nationally. The state lost 6500 small businesses during this same period, which is statistically tied with just one other state as the worst in the region. Unemployment remain a problem with the state chronically under-performing Virginia which is the top state attracting Marylanders looking for a better place to start businesses and find jobs.
Craig will also announce a series of proposals in the weeks ahead that will address the comprehensive list of tax, fee, toll increases and excessive regulatory burdens enacted during the O’Malley-Brown years.
“Martin O’Malley and Anthony Brown put everything on the table in raising levies on every aspect of daily life – ranging from being born, to dying, and to driving a car and having a roof subject to a rain tax. I will also put everything on the table when it comes to reducing them one by one until our state has a rational tax structure that prioritizes individual opportunity over bureaucracy.”
The individual income tax is a particular focus of Craig. According to the Congressional Budget Office, 94% of businesses pay taxes on personal returns as sole proprietorships, partnerships and certain types of corporations.
“Small businesses are the backbone of the economy and job creation nationally, “said Craig. “Maryland’s high personal income tax is a major impediment to attracting, expanding and retaining jobs. It is critical that we eliminate this job killer.”
Maryland counties collect revenue through what is called the “piggy back tax” on state returns. The tax would be held harmless in Craig’s legislation since the 24 jurisdictions count on that revenue for approximately half of their funding.
In fiscal year 2014, the personal income tax is estimated to generate $7.9 billion in revenues, 22% of total state revenues, second only to federal funds. As county executive, Craig twice reduced Harford’s main revenue source – the property tax – saving taxpayers $50 million.