Hogan outlines $480M in tax cuts over 5 years

By Brian Witte, Associated Press | Posted - Jan. 12, 2016 at 3:51 p.m.



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ANNAPOLIS, Md. (AP) — Republican Gov. Larry Hogan outlined plans for about $480 million in tax cuts over five years on Tuesday, as Democrats who control the General Assembly prepared to gather for the annual legislative session with a sour taste still lingering from last year's battle over $68 million in education funding.

Hogan, who campaigned almost entirely on cutting taxes and boosting economic development, said the plan would give tax breaks to new manufacturers who bring jobs to the state, retirees, small businesses and working families.

"I can't imagine how anybody could oppose these common-sense measures," Hogan said, when asked how he plans to avoid some of the difficulties he faced last year pushing tax relief through the legislature.

Meanwhile, leading Democrats were pumped up at a fundraising luncheon, a day before the 90-day legislative session is set to begin. House Speaker Michael Busch, an Anne Arundel County Democrat who butted heads with the governor over the budget last year, said the legislature doesn't convene to rubber-stamp the governor's agenda.

"It has to be a two-way street," the speaker said. "It cannot be a one-way street."

Senate President Thomas V. Mike Miller was emphatic in standing strong on education funding — a major disagreement last year between the governor and the legislature. Miller bristled at the governor's recent suggestion that legislative budget mandates need to be rolled back.

"'Mandate relief' is simply code word for cutting public education," Miller, D-Calvert, said.

After lunch, Miller and Busch said they still had not heard details of the governor's plan for tax relief and would keep an open mind.

"I look forward to give-and-take," the speaker said.

Here are the main components of Hogan's plan:

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RETIREES

The governor wants to phase in an increase in personal tax exemption for seniors 65 and older to $5,000 over four years, above the current exemption of $1,000. The governor's office says it would benefit about 640,000 seniors. It would add up to about $183 million over the next five years.

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FAMILIES

Hogan's plan calls for accelerating an increase of the state's Earned Income Tax Credit. The governor's office says families earning less than $53,000 a year would save $27 million over the next two years.

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MANUFACTURING

Hogan will push for legislation to eliminate the state's 8.25 percent corporate income tax for 10 years on new manufacturers that bring jobs to western Maryland, the lower Eastern Shore and the city of Baltimore. People who earn less than $65,000 a year who are employed by new manufacturers would not pay state income taxes.

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FEE ROLLBACKS

The administration plans to propose a bill to roll back about 100 fees, such as on birth certificates, to save taxpayers about $51 million.

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BUSINESS FILING FEE

The plan would reduce a $300 business filing fee paid to the State Department of Assessments and Taxation by $50 a year for four years. It would benefit about 300,000 businesses, the governor said, and return about $164 million to businesses over five years.

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Brian Witte

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