By Adam Pagnucco.
Many, perhaps most, Democratic state elected officials in Maryland think of themselves as progressive. And the notion of progressive taxation has been used to market Governor Wes Moore’s tax package, which has been depicted as mostly targeted on high earners. But in fact its elimination of itemized deductions has ensnared a significant number of middle-class taxpayers.
How is a middle-class tax hike progressive?
First, let’s consider this email I received from a reader in Montgomery County. She makes about $55,000 a year, which is only a little higher than the county’s self-sufficiency standard in 2023. Because she itemizes deductions, she calculates that the governor’s tax proposal would nearly quadruple the state income taxes she pays.
This is her story.
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Subject Line: Governor’s proposal will raise my state income tax 400%
Dear Mr. Pagnucco,
I am writing you to explain how Moore’s proposed tax plan may disproportionately disadvantage single, divorced female senior citizens.
I am a single divorced senior citizen who lives in Wheaton, MD. I pay income tax on my social security benefit and a small Federal pension which combined amounts to around $55K. Precisely because I itemized deductions, my Maryland income tax payment is only around $330. I still have a mortgage so along with my charitable contributions I have a substantial amount of mortgage interest to deduct. And with such a small income, I can now deduct a large portion of my medical expenses, which consist of health, long term care, and vision plan premiums, along with co-pays, deductibles, prescription costs, parking, and mileage.
Using TurboTax, I have determined that Moore’s new proposal to remove itemized deductions will raise my Maryland income tax payment from $330 to $1200. This is an outrageous increase for a MoCo resident whose income is $55,000/year.
Here are two fallacies that I believe are held by the Moore Administration (and many progressives) regarding senior citizens: 1) everyone who is retired has already paid off their mortgage; and 2) senior citizens do not itemize. While it may be true that fewer married senior citizens itemize because of the large amount necessary to overcome the standard deduction, the opposite is true for single divorced female senior citizens. I use “divorced” as a category because many of us in this category have lower incomes than our widowed female senior citizens friends who are fortunate to benefit from having the higher social security and Federal pension income of their spouses, along with receiving a life insurance benefit and inheriting a larger savings and IRA account.
Although widowed single female senior citizens will most certainly be negatively impacted by Moore’s tax proposal, I believe that divorced, single, female, senior citizens, due to their potentially lower incomes, may suffer disproportionately more by this proposed tax plan.
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That’s the story of one taxpayer, although given the tax data I have previously presented, she is not alone. I will have more in Part Two.