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Maryland Lawmakers Ask Gov. Hogan to Act on SALT Deduction

JAN. 12, 2018

Maryland Lawmakers Ask Gov. Hogan to Act on SALT Deduction

DATED JAN. 12, 2018
DOCUMENT ATTRIBUTES
  • Authors
    Van Hollen, Sen. Chris
    Cardin, Sen. Benjamin L.
    Hoyer, Rep. Steny H.
    Brown, Anthony G.
    Cummings, Elijah E.
    Delaney, John K.
    Raskin, Rep. Jamie
    Ruppersberger, Rep. C.A. Dutch
    Sarbanes, Rep. John P.
  • Institutional Authors
    U.S. Senate
    U.S. House of Representatives
  • Subject Area/Tax Topics
  • Jurisdictions
  • Tax Analysts Document Number
    2018-2054
  • Tax Analysts Electronic Citation
    2018 TNT 10-19

Maryland Delegation Sends Letter to Governor Hogan on State and Local Tax Deduction

January 12, 2018

Today, the Maryland Delegation sent a letter to Governor Larry Hogan inquiring about the Governor's plans to protect Marylanders from the impact of the Republican tax bill's cap of the State and Local Tax deduction. Congressman Cummings was joined in the letter by Senators Van Hollen and Cardin and Congressmen Hoyer, Brown, Delaney, Raskin, Ruppersberger, and Sarbanes. The group released the letter today at a roundtable held by Senator Van Hollen and Congressmen Hoyer and Brown that focused on hearing constituent and business concerns on the tax bill.

“We are writing to ask about your plans to respond to the double-taxation imposed by the new federal cap on the state and local tax deduction, and to offer our assistance as needed,” the Members wrote. “We understand that you are exploring ways to prevent increases in Maryland state income taxes due to the linkages between the state and federal tax code, but we would like to know if you plan to protect Marylanders from higher federal taxes as well.”

Additionally, the Members highlighted the specific impact this will have on Marylanders, writing, “According to the Institute on Taxation and Economic

Policy, over 360,000 Maryland households will get a tax increase under the new tax law in 2019. Maryland is one of the states hit hardest by the new tax law, due in large part to the new $10,000 limit on the state and local tax deduction.

According to the IRS, 46% of households in Maryland claim the state and local tax deduction, which is the largest share of any state in the country. The average state and local tax deduction in Maryland is $12,931 — well over the $10,000 limit.”

The group pointed to proactive measures other states are taking, describing the policies proposed by California, New Jersey, and New York. They close the letter stating that, “We stand ready to help in any way possible, and look forward to hearing your plans to respond.”

The full text of the letter is available here.


January 12, 2017

Governor Larry Hogan
100 State Circle
Annapolis, MD 21401

Dear Governor Hogan:

We are writing to ask about your plans to respond to the double-taxation imposed by the new federal cap on the state and local tax deduction, and to offer our assistance as needed. We understand that you are exploring ways to prevent increases in Maryland state income taxes due to the linkages between the state and federal tax code, but we would like to know if you plan to protect Marylanders from higher federal taxes as well.

According to the Institute on Taxation and Economic Policy, over 360,000 Maryland households will get a tax increase under the new tax law in 2019. Maryland is one of the states hit hardest by the new tax law, due in large part to the new $10,000 limit on the state and local tax deduction. According to the IRS, 46% of households in Maryland claim the state and local tax deduction, which is the largest share of any state in the country. The average state and local tax deduction in Maryland is $12,931 — well over the $10,000 limit.

Other states are pursuing several responses to mitigate the double-taxation imposed by the cap on the state and local tax deduction. California and New Jersey are considering plans to provide a state tax credit for taxpayers who make charitable contributions to support state and local government programs. Taxpayers could deduct these contributions as charitable donations on their federal taxes. There are precedents for the IRS allowing charitable deductions when taxpayers also receive tax credits from their state for donations to school voucher funds or donations of conservation easements on their land.

New York is considering shifting its revenue collections from income taxes on individuals to payroll taxes on employers. The new federal law does not cap the state and local tax deductions claimed by corporations, even as it imposes this cap on families. Therefore, businesses may be able to fully deduct a payroll tax based on the wages paid to their workers, but workers will not be able to deduct more than $10,000 of the income taxes they would pay on those same wages. Shifting revenue collections to a payroll tax could be accompanied by expansion in state credits that would help maintain progressivity in states with a graduated income tax.

Finally, some states are considering a lawsuit to strike down the limitation on the state and local tax deduction as unconstitutional. This lawsuit may assert that the bill discriminates against particular states and that it violates state sovereignty. Several states hit hard by the limit on the state and local tax deduction are considering this approach, including New York and New Jersey.

We stand ready to help in any way possible, and look forward to hearing your plans to respond. 

Sincerely,

Chris Van Hollen
United States Senator

Steny H. Hoyer
Member of Congress

Elijah E. Cummings
Member of Congress

Jamie Raskin
Member of Congress

John P. Sarbanes
Member of Congress

Benjamin L. Cardin
Member of Congress

Anthony G. Brown
Member of Congress

John K. Delaney
Member of Congress

C.A. Dutch Ruppersberger
Member of Congress

CC:
Delegate Michael Erin Busch, Speaker of the House of Delegates

Senator Thomas V. Mike Miller, Jr., President of the Senate

DOCUMENT ATTRIBUTES
  • Authors
    Van Hollen, Sen. Chris
    Cardin, Sen. Benjamin L.
    Hoyer, Rep. Steny H.
    Brown, Anthony G.
    Cummings, Elijah E.
    Delaney, John K.
    Raskin, Rep. Jamie
    Ruppersberger, Rep. C.A. Dutch
    Sarbanes, Rep. John P.
  • Institutional Authors
    U.S. Senate
    U.S. House of Representatives
  • Subject Area/Tax Topics
  • Jurisdictions
  • Tax Analysts Document Number
    2018-2054
  • Tax Analysts Electronic Citation
    2018 TNT 10-19
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