Maryland Gov. Moore plans income tax increases for wealthy residents to help close a $3 billion deficit.

The Democratic governor’s proposal would create a new tax rate of 6.25% for people making more than $500,000 and a rate of 6.5% for taxpayers making more than $1 million.

Under the plan, which requires approval from state lawmakers, Moore said nearly two-thirds of the state’s residents would receive a tax cut, with relief targeted to residents of the Low- and middle-income Maryland, and that 82% would see a tax cut or no tax cut. change.

“And Marylanders who have done exceptionally well financially, we’re going to ask to contribute a little more so that we can make targeted investments in economic growth and targeted investments in public safety and targeted investments in education,” he said. Moore said at a press conference. conference where he presented the state’s $67.3 billion budget.

Helene Grady, Moore’s budget secretary, said Maryland’s highest-earning households currently pay the lowest share of their income in state and local taxes. She cited a finding from the Institute on Tax and Economic Policy that households earning more than $700,000 pay 9 percent of their income in state and local taxes in Maryland, while households earning less than $30 000 pays 9.6%.

“Our proposal aims to alleviate these differences,” Grady said.

Revenue under the governor’s plan would be about $987 million. The plan also includes a proposal to increase the state tax on table games at Maryland casinos from 20% to 25%; Maryland’s tax on sports betting would increase from 15% to 30%. The state’s tax on recreational cannabis would increase from 9% to 15%, a change that would take effect in July 2026.

Moore’s plan would also reduce the state’s corporate tax rate, while implementing combined reporting to close a corporate tax loophole. Combined reporting requires subsidiaries of large companies to add their profits together, preventing multistate corporations from avoiding taxes. The idea has been considered for years by lawmakers, but never approved.

Moore said the measures were necessary because of a long-standing structural deficit that has been “masked” by emergency federal aid during the COVID-19 pandemic.

“And now we face the worst fiscal crisis in at least 20 years, even worse than the Great Recession,” Moore said.

The governor also noted that Maryland’s economy has not grown as quickly as the national economy. From 2017 to 2022, the national economy grew 11%, while Maryland’s grew only 3%, Moore said.

Part of the governor’s plan also includes investments to promote the state’s economic growth.

“If our economy had grown faster, we could better withstand any headwinds or challenges that this state might face,” Moore said. “That’s why economic growth is our North Star.”

The budget plan maintains a rainy day fund of about $2 billion, or about 8 percent of the state’s general fund.

Sen. Guy Guzzone, a Howard County Democrat who chairs the Senate Budget Committee, said he thought the governor had done a “pretty extraordinary job of looking at everything.” Maryland lawmakers will now work through most of the legislative session to approve a balanced budget, as required by law.

“There are some things here that I’m sure are going to give us some heartburn, but we’re going to work through all of that and try to do the best we can,” Guzzone said.

Sen. Steve Hershey, an East Coast Republican and Senate minority leader, said he is encouraged that the governor is trying to spur economic development and create jobs, even as he said those efforts are probably a long term solution. He also considered the reduction in corporate tax positive.

“There is concern that you will continue to raise taxes,” Hershey said, pointing to the increased income tax on wealthy residents and the fact that the tax on millionaires during the tenure of former Gov. Martin O ‘Malley did not give the expected results. He also raised concerns about the possibility of wealthy residents leaving the state.

Separately, the Moore administration is proposing tax and fee increases to help fund the state’s six-year, $21.2 billion Consolidated Transportation program.

The transportation financing fee includes a new retail delivery fee that would apply to businesses with sales over $500,000 and would not affect small businesses. Another proposal would repeal part of the vehicle title tax break that applies when people trade in vehicles. The allowance would not apply to vehicles costing more than $15,000. The proposal would also increase fees for the state’s vehicle emissions inspection program from $14 to $30.

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