Governor O’Malley announced his budget proposal which will reduce the deductions of all Marylanders who itemize and make more than $100,000. Most heavily impacted is the Mortgage Interest Deduction.
Instead of introducing the proposal as a separate bill, where it would have a hearing at which MAR could testify, the Governor is including it in BRFA, the Budget Reconciliation and Financing Act, which means that there will be no hearing or testimony on this specific provision.
The proposal to reduce deductions for Maryland taxpayers will disproportionately burden Maryland homeowners.
The two most important deductions for Maryland homeowners are the mortgage interest deduction and state and local property tax deduction.
Over 50% of Maryland taxpayers itemize, the highest proportion in the country.
Maryland has the highest percentage of taxpayers, almost 38%, claiming the mortgage interest deduction.
The mortgage interest deduction and real estate taxes account for almost 70% of total deductions for Maryland taxpayers.
In 2008, almost 1.1 million Maryland taxpayers claimed the mortgage interest deduction.
That same year, over 1.1 million Maryland taxpayers deducted property taxes.
Real estate accounts for over 20% of Maryland’s gross state product.
Housing and real estate are one of the most heavily taxed sectors of the economy, and Maryland has one of the most aggressive real estate tax structures in the country.
Maryland property owners already carry a significant tax burden, contributing the majority of revenue to local jurisdictions as well as 4.6% of state tax revenues. The average percentage of state tax revenue from real estate nationally is only 1.8%.