FOX 45: Gov. Moore defends budget plans amid questions about tax hikes

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ANNAPOLIS, Md. (WBFF) — Amid budget talks in Annapolis, Gov. Wes Moore is standing by the taxes included along with the cuts and changes to the tax structure.

The House of Delegates passed the budget Wednesday after two days of hours-long debate filled with passionate floor speeches. The plan included roughly $2.3 billion in cuts amid the growing deficit, as well as more than $1 billion in taxes. Gov. Moore wanted to incorporate a corporate tax reduction, but that aspect did not make it in the plan approved thus far.

“I am a very pro-business leader. I believe that we’ve got to make sure that we’re making Maryland more economically competitive and think a corporate tax rate cut is a part of the larger solution that we’re pulling together,” Gov. Moore said, noting he will continue to push for the corporate tax rate cut down the road.

Republicans have argued the taxes included in the plan go against what Gov. Moore has said is his goal: to help grow the economy and make Maryland more business friendly. One of the new taxes is a 3% tax on data and IT services.

“Well, I think the political talking points about things that make it not pro-growth,” Gov. Moore said when pressed on the fact IT and data tax. “I just don’t think that they stand.”

In addition to the 3% data and IT service tax, several other taxes are included in the House’s budget:

  • Increase the cannabis tax from 9% to 12%
  • Implement the 6% sales tax on photo and art material used in advertising
  • Implement the 6% sales tax on precious metal coins – or bullion – sales worth over $1,000*
  • *Items sold at the Baltimore City Convention center would be exempt
  • 6% tax on vending machine purchases
  • New 2% capital gains tax on those earning more than $350,000
  • Increase the maximum local income tax rates to 3.3%
  • Limit itemized deductions for people earning more than $200,000 a year
  • Two new tax brackets: Earning between $500,000 and $1 million: Taxed at 6.25%
  • Earning more than $1 million: Taxed at 6.5%
  • Increasing the standard deduction: $3,350 for single filers and $6,700 for joint filers

Gov. Moore said he wants to ensure the state’s structural budget issues aren’t addressed on the backs of middle-class Marylanders, and when pressed on how he explains the tax increases, he pointed to the changes in the tax code.

“What this budget plan right now has is 94% of Maryland families are about to either get a tax cut or see no change in their taxes at all,” he explained.

According to the Department of Legislative Service Analysis of the plan, the average family of four in Maryland making $100,000 would expect to see a reduction of $53 in their tax burden.

The budget back and forth stretches beyond the details being debated in the session right now. Before leaving office, former Gov. Larry Hogan warned lawmakers and other leaders not to spend down the multi-billion-dollar surplus.

In a January 2023 letter to legislative leaders, Gov. Moore said, “we are in a fortunate financial position.” However, the surplus wasn’t a real surplus, he said when asked where the money went.

“When you have a one-time infusion of cash, that is not structural surplus. That is not math. It’s politics – it’s not math. It’s dark money gaslighting,” Gov. Moore said. “It allowed Maryland to say, ‘we’re not going to deal with the structural issues’.”

Some funding went toward Charlotte Hall – a veteran home in St. Mary’s County – after reports of neglect and abuse sparked the state to end a contract with the facility manager.

“I was not going to let veterans living in the state of Maryland to be living one of the worst veterans’ homes in the country,” Gov. Moore added.

There were other structural funding issues, especially with the Transportation Trust Fund, which required an infusion of cash, Gov. Moore claimed.

The current budget also includes other new taxes to bolster the TTF, including:

  • Change definition of historic cars to any model earlier than 1999
  • Accelerate the increase on vehicle registration fees by one year
  • Increase vehicle excise tax to 6.25%
  • A new 3.5% excise tax on short-term rental cars
  • Increase maximum fee for VEIP test to $30
  • Increase certificate of title fees to $200 for new and used vehicles

The Senate’s budget includes a few differences, including on where agencies are going to cut, Transportation Trust Fund revenue details, and implementing triggers for education and healthcare spending if revenues come in lower or more cuts are made at the federal level. The Senate could start debating the budget on the floor Monday, with conference committees set to being sometime mid-week.