A Giveaway to the Wealthiest is not “Tax Relief for Everyone”

Some Maryland senators are advocating for tax giveaways to the wealthy and calling it “tax relief for everyone.” As appealing as that might be to some, it simply isn’t true.

The package of tax changes approved in the Senate Budget and Taxation Committee today gives the largest tax break to those who need it the least. At the same time, it takes away significant resources that Maryland needs to maintain good schools, safe communities, a well-functioning transportation network, and public investments in a strong economy and broad prosperity.

The proposal may be welcome news to Maryland’s millionaires, who will see the largest tax savings – an average benefit of more than $1,700 to the wealthiest 1 percent. But most Marylanders will see little or no money and face the burden of reduced public services.

When fully phased in, taxpayers with income between $60,000 and $100,000 per year will get an average of just $16. But everyone will bear the costs of the tax breaks for the wealthy because the lost revenue will mean erosion in services that we all rely on. The middle- and upper-income tax breaks added to the EITC bill would cost $232 million per year when fully phased in and $510 million over five years.

Maryland’s state and local tax system already asks the most of those least able to pay – as a share of their incomes – limiting the ability of thousands of families to climb the economic ladder. These income tax changes would worsen this disparity.

The overall tax plan isn’t all bad. A portion of the tax package would be a huge help for working, taxpaying Marylanders who struggle to get by on very low pay. Increasing the state Earned Income Tax Credit for people who don’t claim dependents on their taxes and expanding the credit to cover workers between ages 18 and 24 is a common-sense policy that helps people make ends meet and keep working. The average credit for those in this group would increase by about $300.

Unlike the upper-income tax breaks, this money invested in the EITC will boost the state’s economy. People with very low incomes are much more likely to spend the extra money from a tax refund locally, on things they need but couldn’t otherwise afford, like child care and car repairs.

But this could have been done without costly giveaways to millionaires and a token nod to the middle class. When the full Senate takes up this proposal, it won’t be too late to amend this legislation so it gives meaningful help to those who struggle to make ends meet.