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January 27, 2016
Maryland Governor Proposes Corporate Tax Exemption for Some Manufacturers
by Maria Koklanaris

Full Text Published by Tax Analysts®

Maryland Gov. Larry Hogan (R) on January 12 introduced a $480 million tax relief package that includes exempting new manufacturers from the 8.25 percent corporate income tax if they locate in certain parts of the state.

The package, which the governor announced at a news conference, would exempt for 10 years manufacturers that locate in the state's "empowerment zones," or areas where the unemployment rate is highest. The zones include the city of Baltimore and some rural areas in the western part of the state and along its shoreline. Also, employees of new manufacturers who earn less than $65,000 would be exempt from the personal income tax.

The governor said his tax relief package focused on four groups -- manufacturers, retirees, small businesses, and families that are eligible for the earned income tax credit. Those four groups were among the most affected by tax increases levied in previous administrations, he said.

"The proposals we are announcing today will deliver an additional $480 million in tax relief to those Marylanders who desperately need it most and will put our administration on track to provide more than $1 billion in tax relief to people all across the state," Hogan said.

He also said: "I can't imagine how anybody could vote against these."

In addition to the corporate tax exemption, the package Hogan announced includes:

  • A reduction in various fees. Hogan would reduce the $300 business filing fee by $50 a year for four years, which would benefit about 300,000 small businesses, he said. Also, he would continue last year's policy of eliminating or reducing the cost of certain permits, applications, and state services.
  • An increase in the personal exemption for persons who are 65 or older. Currently senior citizens in Maryland can claim a personal exemption of $1,000. Hogan would boost it to $5,000, phased in over four years.
  • Accelerating an increase in the EITC from 2018 to 2016. At present, families making less than $53,267 a year (and childless single filers earning under $14,820 a year) are eligible for the refundable credit and may claim up to 50 percent of the federal EITC. The scheduled increase would raise that amount to 53 percent.

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