Wednesday, March 17, 2010
Bill Would Make High Wage Earner Bracket Permanent
Two years ago, Maryland enacted a temporary income tax increase on high wage earners, which is set to sunset this year. Legislation (HB 1177) heard by the House Ways & Means Committee would make this 6.25 percent individual income tax bracket permanent. The Maryland Chamber strongly opposes this bill.
“This tax falls disproportionately on small business owners, who need to reinvest funds into their companies to create jobs,” Maryland Chamber Vice President of Government Affairs Ron Wineholt said. “Imposing another $70 million in taxes, predominantly on small business owners, is counterproductive. This tax should be allowed to lapse, as promised, so that Maryland can better compete for and retain jobs in the state.”
Tens of thousand of small businesses in Maryland are flow-through entities, such as S-Corporations and Limited Liability Companies. These types of businesses don’t file corporate income tax returns. The tax on business income is paid on the personal income tax return of the business owners. Flow-through business owners pay individual income tax on all of the business’s net earnings, even the earnings the business owner reinvests in the business.
The tax has failed to make its estimated yield, as the number of individuals filing with $1 million of income dropped by 30 percent in tax year 2008.
For more information, contact Ron Wineholt at .(JavaScript must be enabled to view this email address).
