January 14, 2016

Baltimore Sun: Republican Governor Hogan’s tax plans embrace Democrats’ ideas

By Erin Cox,

Maryland’s Republican Gov. Larry Hogan borrowed the heart of his proposed tax plan for working class families from one of his chief Democratic foes in the legislature.

And the inspiration for his plan to lure manufacturers to the state also came from Democrats: his will be “very similar” to a program by New York Gov. Andrew Cuomo, which has been pushed in the Maryland legislature by one of the more liberal senators in the General Assembly.

One the eve of what’s expected to be a contentious, partisan session of the General Assembly that opens Wednesday, two of the pieces Hogan heralded in his tax relief plan were first championed by Democrats.

Hogan seemed to embrace it.

“As I’ve said a hundred times, I don’t care which side of the aisle the ideas come from,” Hogan told reporters at an Annapolis press conference Tuesday. “I’m looking for the best ideas that can help us turn our economy around.”

Democrats feigned appreciation.

“If imitation is the sincerest form of flattery, Gov. Hogan sincerely flattered General Assembly Democrats today,” Pat Murray, executive director of the Maryland Democratic Party, said in a statement. “Most of the Governor’s proposals have been introduced in some form by General Assembly Democrats.”

One of those ideas was pushed by Sen. Richard S. Madaleno, vice chair of the Budget and Tax Committee and a Montgomery Democrat who has emerged both as a top target of the administration and a sharp-tongued critic of it.

In 2014, Madaleno sponsored the Senate version of bill that would modestly increase the state’s Earned Income Tax Credit by 3 percent over four years. The House version was sponsored by then-Del. Keiffer Mitchell, a Baltimore Democrat who went on to be a Hogan adviser. As is often the case when similar bills clear both chambers, only one – Mitchell’s  in this case – was sent to the governor for a signature to become law.

On Tuesday, Hogan proposed implementing the entire increase in one year. Hogan’s political organization, Change Maryland, called out Madaleno by name on social media, saying they were “looking forward” to his support.

In presenting the idea, Hogan also pushed a policy to which Democrats have largely laid claim.

President Barack Obama and the stimulus package passed by Congress in 2009 pumped an extra $4.7 billion into the federal version of the program, which gives a refundable tax credit that primarily benefits working people with several children. For 2015,  the maximum federal benefit is $6,242 for a family with three or more kids who earn $23,630. If that family owes less than $6,242 in federal taxes, the government writes that family a check for the difference. Advocates often characterize the program as a way to subsidize working families and encourage them to stay off welfare.

Maryland, like many states, has its own version of the Earned Income Tax Credit. The details are complicated, but the refundable portion of it is capped at 25 percent of the federal credit. The bill championed by Madaleno and Mitchell would increase that to 28 percent by 2018. Hogan proposed raising the cap in one year. For that family of five earning $23,630, the refundable portion of Maryland’s credit would be increased by about $187, from $1,560.50 to $1,747.76. 

“I think that would be great,” said Madaleno, who refers to the program by its acronym, EITC.

“If we are going to spend limited tax dollars on tax relief, getting it to the working families in the state, who are going to put that money right back into the economy, the EITC is the best way to do it. … the research shows that almost every dollar that you put out in the EITC is put right back into the economy almost instantly. People pay off bills, people get their car repaired, people buy more groceries, people buy more school clothes. It’s a smart measure.”

Madaleno, though, hopes to broaden the program to make people under 25 years old eligible to receive it, too.