WASHINGTON – Democrats and Republicans have their own ideas on which presidential nominee’s tax-cut plan will most benefit Maryland. David Brunori agrees with both sides.
Brunori, a professor of state and local taxes at the George Washington University Law School, says that because Maryland is a relatively wealthy state it stands to gain more from GOP nominee George W. Bush’s plan.
In the same breath, he says Democratic nominee Al Gore’s plan could benefit the state by helping to close what has been a widening gap between rich and poor in Maryland.
“Maryland is a wealthy state and Bush’s broad tax cuts would benefit the state,” said Brunori, who is also a contributing editor to the State Tax Notes magazine.
“But, Bush’s plan would further widen the gap between the annual income levels of the richest fifth and the poorest fifth in the state,” said Brunori. “Gore’s tax plan meanwhile, if anything, will help bridge this gap.”
Bush’s plan — what Brunori calls the Republican’s “favorable to wealthier people tax plan” — would cut income tax revenues by $1.3 trillion over 10 years, by restructuring tax brackets and reducing the highest bracket from a 39.6 percent tax to 33 percent. He would also double the child tax credit, eliminate the marriage tax and phase out the estate tax, among other changes.
Gore has promised to lower income tax revenues by $500 billion over 10 years, primarily through tax credits targeted to low- and middle-income taxpayers. He would raise the exemption level on estate taxes and reduce the marriage penalty, without doing away with either tax. He also calls for tax incentives on education and retirement savings, child-care costs, environmental cleanup and health care.
Maryland recorded the highest median income in the country from 1998 to 1999, while recording one of the lowest average poverty rates during the same period, according to a September report from the Census Bureau. It said Maryland had a median household income of $51,715, compared to a national average of $40,280 during the period.
But a study by the Maryland Budget and Tax Policy Institute said that while the state’s overall income is high, that wealth is concentrated in fewer and fewer hands.
It showed that, over the last 20 years, the average incomes of the richest 20 percent of families grew by $42,780, after accounting for inflation, while the average income among the poorest 20 percent increased by only $350.
“In general Marylanders are rich. . .the median household income is high,” said Steve Hill, a director at the institute. “But, while the average income for the richest 20 percent grew by 35 percent over the period, that of the poorest 20 percent of Maryland families is virtually unchanged. Not everyone is sharing in the prosperity.”
Democrats say that Gore’s tax plan would help bridge that gap.
“The vice president’s tax plan will make sure that the benefits go to the average working person in Maryland,” said Susan Turnbull, chairwoman of the Gore-Lieberman campaign in Maryland. “His tax plan will keep everybody in a good position, unlike the Bush’s plan which caters to the wealthiest of the wealthy. Bush’s tax plan will just squander our surplus.”
Maryland Republican Party Executive Director Paul Ellington dismissed claims that Bush’s tax-cut plan would widen the gap between the rich and the poor in the state.
“We are not putting any class against each other,” Ellington said. “Our policy is simple — if you earn the money it’s your money.”
Ellington argues that state and federal budget surpluses should be in the hands of the people and not the government.
“The unprecedented surplus level that the state has today belongs to the citizens,” said Ellington.
“The tax burden imposed on Marylanders by the state government is too heavy,” he said. “With a Bush presidency we will get some federal tax relief and we’ll just hope that the state government follows suit.”