Taxes, Fairness & the Campaign Trail: This Week’s Updates

I have been thinking a lot this week about budgets and taxes. This past Monday, April 13, was Sine Die — the final day of the Maryland General Assembly’s 90-day session and the deadline by which the state’s operating budget for the next fiscal year must be finalized. The state funds its operations through taxes. And, as we all know, Tax Day was Wednesday, April 15.

We Had Our First Meet & Greet!

Will you host the next one?

At my first meet & greet in Kensington, it was not a total surprise to find that others had been thinking about taxes and budgets, too. The questions weren’t specifically about taxes, but many attendees are extremely well informed about local politics — and, between 24/7 news and DOGE-related federal layoffs hitting our neighbors, they can’t avoid the real-life impact of federal policies. The question many asked: what, exactly, is the state’s role?

In this area, as in many others, the state has enormous and largely invisible power. It has the power to tax. The county’s taxing authority is what the state gives it through enabling legislation.

We know that taxes are the price we pay for our families to live together as a society. Taxes and fees pay for our roads and bridges, our schools and fire departments. Individuals and families benefit from the physical and social infrastructure our taxes buy.

Businesses and their owners benefit from taxes, too. Business longevity depends on a stable society. Without things built and held in common — and paid for through taxes — our families live marginal lives. No business wants to operate in a state with broken roads, unreliable electricity, non-functioning courts, undereducated workers, unpredictable judges, or people too poor to buy what they produce.

Sometimes, though, to hear people talk, you’d think taxes were the enemy of business — the prime obstacle to growth and success — rather than the foundation that allows businesses to operate. Sometimes it even seems like taxes might be the enemy of families.

They are not. But it can feel that way. We’re not always sure what we’re getting for our money, and who pays how much doesn’t seem fair.

We need budgets that are clear and taxes that are fair

The county budget is opaque. Approximately $3.6 billion — roughly half of the county’s annual budget — supports our public schools, yet the individual needs of our children aren’t always met. Our school buildings have black mold and leaky ceilings from deferred maintenance. Funding for the childcare scholarship has been frozen for a year, and only about 15% of eligible Maryland families receive scholarship support.

Meanwhile, the biggest cuts in the $70 billion state budget passed earlier this month targeted the Developmental Disabilities Administration (DDA) and education funding, including the Blueprint for Maryland’s Future.The two largest taxes that fund county schools and services are property taxes and income taxes. The county aggressively reassesses homes and raises personal income taxes to raise revenue. These are the tools in its toolbox.

Meanwhile, do you know who doesn’t pay their fair share? Approximately a third of the state’s largest and wealthiest businesses pay no Maryland state corporate income tax. Caregivers don’t get tax breaks — but certain large corporations do, businesses that threaten to leave every decade or so. And the Maryland Comptroller’s office has estimated a substantial annual tax gap due to insufficient resources for enforcement.

Death and taxes may be inevitable, but unfairness and opacity are not.

I Will Fight for Change

›Provide sales tax authority to the county — many other states already grant counties this power — so Montgomery County can apply taxes to things like cannabis and luxury items.

›Increase funding for the Comptroller’s enforcement activities.The Comptroller estimates $3 billion per year is lost due to lack of adequate staff to enforce state tax laws.

›Fight for worldwide combined reporting — the law in 28 other states — which prevents big businesses from avoiding paying taxes in Maryland on money they earn in Maryland.

›Close the “LLC loophole” — large businesses structured as LLCs or other pass-through entities are exempt from corporate income taxes. Closing this loophole — while protecting small businesses by exempting the first $1 million in profits — could generate an estimated $745 million in annual revenue for Maryland.

›Demand accountability for tax credits and pass a law requiring them to be itemized as costs — just as grants to nonprofits are — so taxpayers can see exactly what they’re subsidizing.

Support The Campaign!

If you are local — in District 18 or the wider county — there are many ways to get involved! Drop me a note or give me a call. Here is the next opportunity to connect:

Tuesday, April 21

9:00 – 11:30 am

The District Cafe, Kensington, MD

If you are not local and would like to contribute to the campaign, you can do so at katesteind18.com. You do not need to be a resident of Maryland or District 18 to contribute.