ANNAPOLIS, Md. — Some might think Maryland's Republican governor would cheer a proposed 1% cut in the state's sales tax. Instead, the famously anti-tax governor hit the ceiling over the proposed decrease from 6% to 5%.
"It’s not ever going happen while I’m governor, I can promise you," Larry Hogan said after the plan was unveiled by Democratic leaders to pay for a $32 billion sweeping education reform effort known as the Kirwan Commission plan. "It would destroy our economy."
That's because the sales tax cut proposal unveiled by House Majority Leader Del. Eric Luedtke (D- Montgomery County) comes with an expansion of what expenditures would be taxable, primarily services that have never been taxed before.
The proposal would levy taxes on a wide range of services from accountants, lawyers and auto repair shops, to salons, dog walkers and lawn care.
Medical services and child care are among the exemptions to the tax, legislators said.
In the end, the new proposed 5% sales tax scheme would actually cost taxpayers an additional $26 billion by 2025, according to the bill's sponsors.
"Part of the issue is that over time, our economy has become more services-based," Luedtke explained. "So the sales tax has degraded over time as people are buying less things and more services."
Luedtke estimated that the average Maryland household taking in about $80,000 of combined income would end up paying about $156 more per year in sales taxes under the proposal.
Despite the sharp criticism from Gov. Hogan and business interests like the Maryland Chamber of Commerce, some Democrats believe the proposal may actually lower taxes for the working poor who do not typically hire service providers like lawyers and accountants.
Del. Maggie McIntosh (D- Baltimore) thinks there will be some winners if the 6% sales tax is lowered to 5%.
"This could help a working family with kids who are in the stores and out of the stores and who bear the burden of the sales tax structure right now," McIntosh said.
Hogan has vowed to veto the plan if it passes, but the General Assembly has a substantial Democratic majority that could override a gubernatorial veto.