Ed Johnson won’t be going on a shopping spree anytime soon with the money he will save on a state income tax cut that took effect Jan. 1.
“I wish I could have seen it,” said Johnson, 38, an Upper Marlboro resident who said he did not notice any significant change in his first paycheck of 1998.
Many Marylanders will find themselves in the same boat. The 10 percent tax cut, to be phased in over five years, will amount to pocket change for many, even though lawmakers hailed the measure as welcome relief for overtaxed residents when they passed it last year.
“Tell them to put it in my hand personally,” said Johnson, an account merchandiser for Edy’s Grand Ice Cream.
The first phase of the cut amounts to roughly 2 percent for 1998.
“I don’t remember seeing a difference,” said Delores Hall, 56, a cashier at the Motor Vehicle Administration in Glen Burnie. “I definitely think we pay too much taxes. They ought to give the taxpayer relief.”
The tax cut package includes a number of changes estimated to lower income taxes by 10 percent in 2003. The tax rate for income over $3,000 will be reduced from 5 percent to 4.75 percent in the final year of the plan and the personal exemption will be increased from $1,200 to $2,400.
When the tax cut is fully implemented, a single person earning $25,000 will save about $104 a year, according to the estimates by the Department of Budget and Management.
But that same person will only save about $21 this year — or 40 cents a week. An unmarried worker earning $60,000 will get an extra 49 cents a week in 1998 and a family of four earning $40,000 will get another $1.18 in their take-home pay.
“What are we going to do with all that?” John Doyle, 29, of Ridgely, asked sarcastically. He said he “didn’t notice nothing” different in his first paycheck this year.
But Debbie Mohr says the cut will add up, particularly in 2003 when it is fully phased in.
“Even if it’s change, it’s important,” said Mohr, 38, who works in Easton. “Change adds up at the end of the year. You can’t buy stuff with change, but you can with dollars.”
Some lawmakers have said a projected $260 million surplus this year should be used to expedite the tax cut.
“We’ve got the money, and the money belongs to the taxpayers,” said Del. Don Hughes, R-Wicomico, who wants to speed up the five-year schedule by a year. “What better place to put it?”
Gov. Parris N. Glendening will address the question in his State of the State address Wednesday, said Ray Feldmann, his spokesman. But the issue could prove difficult, he said.
“To reduce it from five years to three has a significant impact on the budget,” Feldmann said. “Decreasing it from five years to four eats up almost the entire budget surplus.”
Chris Saporito, general manager of Sam’s Club in Frederick, didn’t know of the tax cut or its implications. But the Hagerstown resident welcomed whatever extra money he would get.
“I have not noticed it, but any tax cut is great,” said Saporito, 29. “We appreciate it, because it’s more money for us.” –Capital News Service reporter Scott Albright, Kelly Cramer, Keisha Stewart and Daniel Valentine contributed to this story.