The Maryland Chamber of Commerce had an eye-catching headline on its website:
"Special Session Results in $800 Million in New Business Taxes"
When you hear your governor call for a "Special Session", grab your wallet! Here is the Chamber's summary of what the legisalture did to Maryland businesses and citizens.
"The General Assembly concluded its 3 week special session today by enacting $1.4 billion in new taxes, $400 million in possible future state budget reductions, and authorizing slots at up to 5 locations, if approved at referendum by the voters in November of 2008. The share of new taxes paid by Maryland businesses will exceed $800 million. The final package of 6 bills differs significantly from the Governor’s original proposals, but should resolve the projected state general fund structural deficit and pump over $400 million annually into state transportation projects.
The corporate income tax rate would increase from 7% to 8.25% effective for taxable years beginning after December 31, 2007.
Although combined reporting was defeated, a 17-member Maryland Business Tax Reform Commission will study changes to the state’s business taxes over the next 4 years. The Maryland Chamber of Commerce will have the only business member on the Commission.
New, extensive and onerous reporting requirements will be imposed on corporations as part of their corporate tax return or for publicly traded companies with any minimal business activity in Maryland, effective for taxable years beginning after December 31, 2005 (see pages 40 - 49 of SB 2).
Sales tax rate increased from 5% to 6% effective January 3, 2008.
Vendor credit limited to $500 per return from January 3, 2008 to June 30, 2011
Vendors would be allowed to assume or absorb the sales tax.
Sales tax imposed on certain “computer services” from July 1, 2008 to June 30, 2013 (see pages 24 - 25 of SB 2).
Individual Income Tax
New brackets of:
5% of income over $150,000 individual/$200,000 joint
5.25% of income over $300,000 individual/ $350,000 joint
5.5% of income over $500,000
Personal exemption is increased from $2,400 to $3,200, but phased-out at incomes above $125,000 individual and $175,000 joint.Transportation Titling tax increased from 5% to 6%, with a full trade-in allowance, for titles issued on or after January 1, 2008.
No gas tax increase.
Transportation to receive roughly 50% of the sales tax rate increase and other revenues for a total state transportation revenue increase of over $400 million annually.
The state share of revenues would be dedicated to funding education aid, school construction and higher education construction.
See the enacted bills at the following links:
HB 1 - Budget Reconciliation Act (pdf)
SB 2 - Tax Reform Act of 2007(pdf)
HB 5 - Transportation and Sales Tax Bill (pdf)