Del. Sam Arora thinks he has found a way to do almost the impossible in government — raise revenues without raising tax rates.
Arora has filed a bill that would change the state tax code to make electing small business trusts subject to state income taxes. Those trusts were formed by Congress more than a decade ago to allow stock in certain corporations to be held in trust as it earns income for beneficiaries. The funds have been subject to federal income taxes, but not Maryland income taxes.
“Tens of millions of dollars are left on the table,” said Arora (D-Dist. 19) of Silver Spring. “Now that we’re in the fiscal situation we’re in, it’s time to close this loophole.”
Similar bills have passed in the state Senate and House in previous years but not both chambers during the same session. The proposal attracted five co-sponsors as of Thursday and is slated for a hearing in the House Ways and Means Committee at 1 p.m. on Tuesday.
Transportation bill reviewed
Business leaders testified this week before the House Appropriations Committee on a bill that would implement a constitutional amendment to restrict transfers from the state Transportation Trust Fund for non-transportation purposes.
“Investing in our transportation infrastructure will create jobs and help keep Maryland competitive, but we have to ensure the integrity” of the trust fund, said Allyson Black, vice president of government affairs for the Maryland Chamber of Commerce on work force issues, transportation funding and environmental matters.
The legislation is sponsored by Del. Susan W. Krebs (R-Dist. 9B) of Eldersburg and has attracted more than 35 co-sponsors. It calls for a voter referendum in November.
In the past three fiscal years, more than $850 million has been transferred from the transportation trust fund to the general fund to help balance the state budget, according to a state legislative analysis.
Combined reporting bill back
A bill that would impose the combined reporting tax system on corporations is scheduled for a hearing in the Senate Budget and Taxation Committee at 1 p.m. Feb. 22.
The Maryland Business Tax Reform Commission recommended against adopting combined reporting about a year ago. The system is employed in more than 20 other states and requires companies that operate in multiple states to pay a portion of all combined profits based on revenues in those states and other factors.
The bill was filed by Sen. Paul G. Pinsky (D-Dist. 22) of University Park and has attracted 15 co-sponsors. Advocates say it will result in a fairer tax system and raise revenue. Opponents, which include the Maryland chamber, say that competitor states do not use combined reporting, and it will hurt the state’s business climate.
Statewide bag fee proposed
A statewide 5-cent charge for disposable paper and plastic bags from retailers would help clean the environment and Chesapeake Bay, say lawmakers who support the legislation.
But others say it’s just a way to raise more revenue.
“People are paying enough when they’re grocery shopping already,” said Senate Minority Leader David R. Brinkley (R-Dist. 4) of New Market, who opposes the proposal. “I just think this is one more way someone’s thought of to take money from the public’s pocket.”
Pinsky, a co-sponsor of the bill, said it is being done to protect the environment.
“We need to do this to clean up the environment, reduce our energy usage, and just become environmentally sound,” he said.
A similar bag fee took effect Jan. 1 in Montgomery County.
Under the proposal, retailers would keep 1 cent from each bag sold. If a retailer offers a store credit to encourage the use of reusable bags, it then would qualify to keep an additional 1 cent of the fee. The bill lists bags that would be exempt from the legislation, including sacks used to contain bulk items such as candy or fruit, wrap flowers, carry fast food and protect dry cleaning.
A portion of the collected fee would go to the state Comptroller’s Office and the Department of Labor Licensing and Regulation to run the program.
The remaining portion would be split between the Chesapeake Bay Trust and counties, which would have to use the money for community greening projects, stormwater control and trash or litter cleanup projects.
The bag tax failed to gain traction in either chamber of the legislature last year. A hearing is scheduled at 1 p.m. Feb. 28 in the Senate Education Health and Environmental Affairs Committee.
Pinsky has filed a bill to support the fee in Prince George’s County if the statewide measure fails.
Staff Writer Danielle E. Gaines contributed to this report.
kshay@gazette.net
