Is it the BFRA Bill or the BARF Bill?
The combination of tax season and a poor economy has Americans more watchful of the money they’re trying to save and not trying to spend. We look to maximize every deduction that we can, so that we don’t give up more money to the government.
We are also more aware of what is happening in the federal and state governments so that we can push our legislators to represent us, their constituents, to the best of their abilities.
It is in this perfect storm of a distressed economy and tax season that there is a groundswell of anger in the State of Maryland. At the request of the state administration, House Bill 87/Senate Bill 152 was introduced on January 18, 2012. Titled the “Budget Reconciliation and Financing Act of 2012” (a.k.a. “BRFA”), the 48-page bill proposes, among other things, the following:
An individual who elects to itemize deductions is allowed – as a deduction – the sum of the individual’s federal itemized deductions:
(1) limited and reduced as required under the Internal Revenue Code; and
(2) further reduced by any amount deducted under §170 of the Internal Revenue Code for contributions of a preservation or conservation easement for which a credit is claimed under §10–723 of this title….
Maryland’s allowed deductions are further reduced as follows:
(A) By 10% if an individual’s Maryland adjusted gross income for the taxable year is greater than $100,000 but not greater than $200,000; and
(B) By 20% if an individual’s Maryland adjusted gross income for the taxable year is greater than $200,000.
In layman’s terms, this BRFA bill would reduce the mortgage interest deduction and the ability to deduct state and local property taxes for many Maryland homeowners.
Under the proposal, if a Maryland taxpayer’s federal adjusted gross income exceeds $100,000, then a single taxpayer’s itemized deductions would decrease by 10% when calculating Maryland taxable income. Taxpayers with an adjusted gross income of over $200,000 would see their deductions decrease by 20%! Our nation’s tax code has served to protect our ability to claim mortgage interest as a deduction for over a century, not take them away.
If this bill passes, Maryland would be the first state in the country to pass such a law. We should be proud that Maryland’s schools are number one in the country. We should strive to be a leader in other things, but not this. We can do without this distinction.
The mortgage interest deduction that Maryland taxpayers utilize, and the ability to deduct state and local property taxes, account for almost 70% of total deductions claimed by Maryland taxpayers. These deductions are important incentives for a strong housing recovery – part of the solution for a national economic recovery. Furthermore, because real estate accounts for over 20% of Maryland’s gross state product, more tax burdens on homeowners will only further hurt Maryland’s efforts toward an economic recovery.
We – as Maryland citizens – must contact our representatives and stop House Bill 87/Senate Bill 152 from passing. Call them. Email them. Write them. Do what you can to stop this bill from passing. Your best first step is to go here: http://mdelect.net.
For all the good this BFRA bill would do, it should be renamed “The BARF Bill”….