Maryland Governor Will Submit Legislation To “Protect” Taxpayers From GOP Tax Bill


On the heels of the House of Representatives second vote to pass the GOP’s tax bill this morning, Maryland Governor Larry Hogan has announced that he will be submitting legislation to “protect” taxpayers in his state from the bill.

In remarks at a meeting of the Board of Public Works at the Maryland State House, Governor Hogan said:

As you all know, it looks like the federal tax reform effort may soon be officially signed into law. Its exact impact on the State of Maryland has not yet been determined. It’s clear that some people’s taxes will go down, and some will go up. I know that Comptroller Franchot and his team will be doing an analysis to determine how Maryland taxpayers will be affected. However, it is very clear that due to the loss of several longstanding federal tax deductions and exemptions, Maryland state revenue will likely increase by hundreds of millions of dollars.

“I am announcing today that our administration will submit legislation that will protect our taxpayers, and which will mitigate negative impacts of these changes to state taxes. Our goal will be to leave that money in the pockets of hardworking Marylanders. I am confident that our partners in the General Assembly who have expressed concern over the impact of this tax reform bill will support us unanimously in protecting Marylanders who could be negatively affected. Protecting taxpayers should be a bipartisan issue.

According to Hogan, the legislation will return any additional state revenue received due to the loss of federal deductions and exemptions.

Governor Hogan is the first to announce state-specific legislation in response to the GOP’s plan to change the federal tax code. Other governors are considering several options including court challenges. On a recent conference call with reporters, California Governor Jerry Brown, New Jersey Governor-elect Phil Murphy and New York Governor Andrew Cuomo all said they were considering legal challenges to the bill, which will increase costs for individuals who live in high taxation states.

The tax bill will limit the deductions individuals can take for state and local taxes. Currently, individuals can deduct an unlimited amount the new bill caps the deduction at $10,000. Policymakers in higher tax states have voiced concern about double taxation and wealth flight in response to the change, which could negatively impact state revenues over time. The bill will also completely eliminate advance refunding on municipal bonds, a move which was heavily opposed by city leaders.

In a statement released today from National League of Cities (NLC) President Mark Stodola, mayor of Little Rock, Arkansas, Stodola said he and other municipal leaders would work to restore the full state and local tax deduction as well as the ability to advance refund municipal bonds. Stodola also indicated that he hopes federal policymakers will focus on infrastructure in 2018. There is broad bipartisan support for a federal infrastructure funding package, but infrastructure funding has been put on the back burner ahead of the mid-term elections in favor of attempts to repeal the Affordable Care Act and the tax bill, which will reorganize the federal tax code in favor of corporations.