Competing tax plans spark debate in Montgomery County

MARYLAND - Montgomery County Executive Marc Elrich is expected to argue the Council president's budget proposal that fundamentally changes his suggestion to raise taxes at Wednesday's briefing. 

Elrich and Montgomery Council President Natali Fani-Gonzalez are at odds because both aim to raise taxes to sustain the county's economy, but do so in completely different ways. 

"I was quite surprised by this proposal from the Council President proposing dramatic changes to the budget and tax structure," Elrich wrote in a County Executive Newsletter. 

Elrich's budget proposal from last month includes a property tax increase of 6.3% and an income tax increase by 0.1% to fund Montgomery County Public Schools and other services, while Fani-Gonzalez proposes a bracketed income tax structure by eliminating certain tax credit services. 

Marc Elrich's budget proposal:

Elrich's budget proposal to raise the property tax by 6.3% is coupled with a 0.1% increase in income taxes from 3.2% to 3.3%. 

To remedy the impact on lower-income residents, the budget proposes increasing the Working Families Income Supplement match of the state earned income tax credit. The 4% increase from 56% to 60% is meant to help households earning less than $50,000. 

Natali Fani-Gonzalez's proposal:

Fani Gonzalez's proposal cuts Elrich's proposed 6.3% property tax increase and changes the income tax structure. 

Under this proposal, the income tax bracket would tax the highest earning households.

• $0 – $50,000 adjusted gross income pays 2.5% income tax rate, a 0.7% decrease from the current amount,
• $50,001 – $150,000: 2.8% income tax, 0.4% decrease.
• $150,001 – $300,000: 3.2% income tax, 0% decrease.
• Greater than $300,000: 3.3% income tax, 0.1% increase.

These numbers mean that 96% of Montgomery County households receive a tax break.

However, in order to afford these reductions, the Income Tax Offset Credit (ITOC) and the Working Families Income Supplement (WFIS) will be eliminated. There will also be a unified 2% rate for negotiating pay raises across agencies. 

Fani-Gonzalez argues that low income households earning less than $50,000 do not benefit from WFIS and ITOC is also imperfect to provide relief.

What they're saying:

Elrich has responded to the counter proposal in a press release, saying that Fani Gonzalez's plan to eliminate ITOC would result in most homeowners paying more property taxes. Elrich writes that ITOC provides a flat $692 credit on every residential tax bill, and the property taxes for anyone with a home valued under $1,090,000 will be higher under Fani Gonzalez's proposal.

He also criticizes the cutting of the WFIS, claiming that most low-income workers would likely earn less under her budget proposal. 

The Council is still in the process of reviewing Elrich's plans, and he is expected to speak out against the county president's proposal at Wednesday's meeting.