Out and About (Sort of): Look to Annapolis… please by Howard Freedlander

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For many of us, the drama and dysfunction in our nation’s Capital are often captivating, comparable to a soap opera that grows increasingly more alarming in each daily episode. That won’t change, at least for another three years.

To glimpse a smidgeon of sanity and periodic good governance, I recommend that readers pay close attention to the 2018 General Assembly, now in its seventh of 90 days. Allow me to explain why I offer this antidote to the utter craziness and absurdity in Washington, DC.

First, the Maryland legislature must address the windfall, possibly millions of dollars, that will come the state’s way due to the recently enacted federal tax reform. This is a bad-news-good-news scenario: Marylanders will lose the ability to deduct local and state taxes up to $10,000—for example, state and local income, sales, real estate or property taxes. Hence, the state is expecting a windfall from the collection of dollars that previously had been deductible.

If for only this reason, all Marylanders should pay attention to this year’s legislative session. It’s your money and mine that will be the subject of lengthy discussion. And this will occur in an election year. Politics is always the backdrop in Annapolis. For this session, it will dominate the deliberations.

From what I’ve read, Gov. Larry Hogan is designing a proposal that may recommend returning the money to taxpayers. Democrats are leery. They are concerned about potential federal cuts to social programs, such as the Children’s Health Insurance Program, which covers low-income youth and may run out of money in April.

So, the windfall will be double-edged. While a bipartisan solution would be ideal, such an expectation may seem fanciful in an election year. The popular Gov. Hogan is seeking re-election; Democrats are loath to provide the governor bragging rights for a proposal that seems simple and equitable—returning money to taxpayers who will have to spend more due to federal tax reform—without examining the downside of distributing money that may be needed to plug holes created by spending cuts in Washington.

Senate President Thomas V. Mike Miller said the legislature plans to gather a group of tax experts to analyze the new federal tax law. He also predicted this year’s 436th session will be particularly “contentious…this tax plan to going to cause us a fit,,,I ask for God’s help.”

Another reason that Marylanders should pay attention this year to the state legislature provides entertaining political theater. Gov., Hogan has proved to be a skillful politician appealing not only to Republicans but Democrats and Independents alike. Senator Mike Miller, who has served more than 30 years as president of the State Senate, is a canny, shrewd politician who has been a thorn in the side of Democrat and Republican governors. His House of Delegates counterpart, Speaker Mike Busch, too is a fervent Democrat who leads a body of legislators more liberal than those in the State Senate.

Will election-year politics rear its head in the 2018 General Assembly? You betcha. It won’t take long. With the infusion of a windfall of money due to federal tax reform opposed and derided by Democrats, discussion will be lively and hyper-partisan. I hope, amid the inevitable uproar, that taxpayers will benefit from sound and wise decisions.

Gov. Hogan will need to get personally involved in finding an equitable solution to the tax bite to be felt by Maryland citizens. While partisanship will be a major undercurrent, pocketbook politics should drive both parties. Miller and Busch need to protect their flank too.

Before the session ends in April, the legislature must address what many women legislators, staffers and lobbyists consider so abhorrent, and that is engrained sexual harassment in Annapolis. As is true in Congress, no longer can sexual misconduct be tolerated, viewed as permissible in a culture that has not taken allegations of sexual harassment as seriously as it should. More credible reporting, oversight and punishment are undeniably necessary.

I mentioned at the outside that a focus on the current legislative session might be a relief from the circus-like environment in Washington. More correctly, the Maryland General Assembly, though hyper-partisan, typically offers solutions easier to enact than down the road in Washington with more immediate and apparent impact.

Follow the money. Millions of dollars in new money can be a curse.

Sen. Miller solicited God’s help. I hope that common sense, flavored by omnipresent politics, will play a role.

Columnist Howard Freedlander retired in 2011 as Deputy State Treasurer of the State of Maryland.  Previously, he was the executive officer of the Maryland National Guard. He  also served as community editor for Chesapeake Publishing, lastly at the Queen Anne’s Record-Observer.  In retirement, Howard serves on the boards of several non-profits on the Eastern Shore, Annapolis and Philadelphia.

 

 

 

Letters to Editor

  1. David Lloyd says:

    “First, the Maryland legislature must address the windfall, possibly millions of dollars, that will come the state’s way due to the recently enacted federal tax reform. This is a bad-news-good-news scenario: Marylanders will lose the ability to deduct local and state taxes up to $10,000—for example, state and local income, sales, real estate or property taxes. Hence, the state is expecting a windfall from the collection of dollars that previously had been deductible.”

    This makes no sense. Marylanders will lose millions of dollars because they will not be able to deduct state and local taxes from their federal returns beyond a maximum of $10,000. That will increase Marylanders’ federal income taxes — and that extra money will then be sent to (‘Red”) states that have lower state and local taxes. Where is the “windfall?” What am I missing.

    And, I hope you are correct. But, not holding my breath.

    • Howard Freedlander says:

      The State of Maryland collects local and state raves, such as personal income and property taxes. If only $10,000 is deductible, then the state would collect more taxes. That money then would flow into state coffers. This infusion of money is being viewed as a “windfall.” Thus, the legislature would have to decide how to spend (or not) these unexpected funds.

      • Stephen Huntoon says:

        Howard,

        Thank you for your columns. IMHO you are mistaken in thinking that the amount of state and local taxes that are deductible for federal tax purposes has any relationship with the amount of state and local taxes that are collected. There is no forthcoming windfall in state and local tax revenues.

        Best wishes,

        Steve

        • Howard Freedlander says:

          Thank you, Steve. According to today’s Baltimore Sun, which typically covers state matters accurately and thoroughly, “Unless state law on (personal) exemptions is uncoupled from federal policy, lawmakers said, Maryland taxpayers will pay out an additional $680 million in state and local taxes next year.” For that reason, Gov. Hogan and state legislators are considering proposals to ameliorate the impact of federal tax law on Marylanders. As I wrote, I urge Spy readers to pay attention to tax deliberations in Annapolis.

          • Stephen Huntoon says:

            Howard,

            Thanks. In reading the Sun article I see that the state and local tax increase would be due to federal elimination of exemptions, and state law tracking federal exemptions. This would cause a state and local tax increase, and a windfall in state and local tax revenues.
            This is a different matter than the deductibility of state and local taxes for federal tax purposes, which does not affect state and local tax revenues.
            BTW, regarding the proposal to create a state-run education charity and give a one for one tax credit for donations, that will not fly. A charitable deduction is not allowed for value received by the donor, and in this case the one for one tax credit is plainly value.

            Best wishes,
            Steve

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