Hundreds protest Maryland plan to cap income tax deductions
(AP, ABC7) Hundreds rallied in front of the Maryland State House to oppose a proposal by Gov. Martin O'Malley that would cap income tax deductions at 90 percent for taxpayers with incomes above $100,000 and 80 percent for taxpayers who make more than $200,000.
The proposal would affect mortgage interest deductions.
Maryland Comptroller Peter Franchot joined the protest Wednesday, saying this couldn't be a worse time to take away incentives to buy new homes just as housing sales are helping Maryland move out of the recession.
Real estate agents like Donna Evers worry it will reduce incentives to buy new homes. And it won't just be the real estate industry hurt but jobs in construction, finance and other areas.
“We do not need a blow that's gonna deplete the recovering housing market and it's gonna reduce jobs and reduce income ultimately of course for the state,” Evers says.
"It's just stealing from the taxpayers," said Karen Winterling, of Ellicott City, who rallied with her husband David in Annapolis. "This is something - a benefit - that we bought into 10 years ago when we bought our home. I mean, how can you change the rules right now?"
The Winterlings, who are small business owners, said they are considering moving out of the state because of frustrations with the tax proposals pending in the General Assembly.
"They're pushing us right out of the state," Karen Winterling said. "How's that going to help Maryland?"
Mortgage interest accounts for the largest amount of Maryland itemized deductions, comprising about 51 percent of them. Charitable contributions make up the second highest amount, or about 17 percent.
Property taxes come next at about 14 percent. Real estate agents have been attacking the plan for weeks.
Senate President Thomas V. Mike Miller, D-Prince George's, said Wednesday he doubted the cap on mortgage interest deductions would survive as lawmakers work to tweak O'Malley's budget plan.
The Senate Budget and Taxation Committee is holding a hearing Wednesday afternoon on a big budget-balancing bill that contains the proposal.
The measure aims to balance the budget by transferring money, increasing taxes and fees and eliminating several tax credits and exemptions.