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A Miner Detail: The 2019 Annapolis Session Winners and Losers [EXCERPT]
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The Bay Times and Record Observer: Franchot discusses taxes, economy, visits local businesses
December 27, 2018
CHESTER — Maryland State Comptroller Peter Franchot visited Queen Anne’s County on Thursday, Dec. 20, to tout economic growth and discuss the upcoming tax season for Maryland residents.
Among his stops were Bada Bean Coffee House and the Bay Times in Chester, Animal Welfare League of Queen Anne’s County in Queenstown, and D’Alessio’s Wood-Fired Pizza in Stevensville. Aside from giving the new businesses proclamations for their contributions to economic development of the of Island and meeting locals, he also toured the AWL shelter and heard staff concerns about the need to expand.
Taxes topped much of the discussion during his visit, including the recent overhaul of the federal tax system and how Gov. Larry Hogan and state hope to stave off a higher tax liability for the average taxpayer plus the coming update of the state’s tax processing system.
“The federal tax cut will give almost all Marylanders a cut in their federal tax,” said Franchot. “Some will pay more state taxes in order to get the federal tax cut. You have to take the standard deduction, which has been increased at the federal level from $12,000 to $24,000. When you claim the standard deduction at the federal level, you have to claim it at the state level as well.”
Franchot said the state level standard deduction is much smaller, and by claiming the standard deduction, taxpayers forgo individual deductions.
When the state tax increase to some is combined with the federal tax cut, that still totals a smaller individual tax burden, he said.
According to Franchot, only 6 percent of Maryland taxpayers on a net basis will be paying more.
On Wednesday,. Dec. 19, the Board of Public Works approved a $159.7 million contract to replace and upgrade the state’s tax processing system with a state-of-the-art program that will expand revenue-generating projects, provide enhanced reporting functionality and make it easier for taxpayers to view their accounts.
“We’ve spent much time preparing for (tax season) and now we have the company who’s actually going to implement it. We’re going to go slowly in the first three years and then plug it in the fourth year. Realistically, we’ll see improvements within two years,” Franchot said.
The system is designed to combine all facets of a tax return including personal and other types of filing. Aside from improved flexibility and user interface, Franchot said, it will also provide better security against hackers looking to intercept refunds.
Franchot noted the upfront cost of the system was just one of the few issues in providing a tax system “for the twenty-first century” that will outlast even himself.
An estimated 90 percent of the state’s tax returns are now filed electronically making the refund process that much more expedient. An average of just 2.1 business days will pass before a refund is electronically deposited into a taxpayer’s account, Franchot said.
The state is currently enjoying month 113 of economic expansion with the current record being 119 months.
With the state seeing a 2.6 percent increase in small business growth, Franchot attributed that to changes of the tax code at the federal level and low unemployment numbers. While he was glad the economy was experiencing an uptick, he warned that excess funds should be placed in a rainy day fund for a possible recession.
“For the next 12 months, it’s a boom town for small businesses because there’s very much money out there. We see that in the small business figures but we hope they have their (books) in order in case of an economic downturn,” said Franchot.
Maryland currently boasts nearly 600,000 small businesses employing 1.1 million individuals, Franchot sees the current economic trends as a sign of strong economic bones. He credited the private sector with sustaining that.
With Queen Anne’s County poised to have more than 50,000 residents by 2020, keeping it economically viable starts with the expansion of broadband across the Eastern Shore, Franchot said.
Franchot also noted that supporting local businesses attracts other businesses.
During his visit, he toured local businesses and commented on the vital role they play in providing a healthy tax base for the county and state.
“This recognition is great. Not many small businesses get that even though you see to buy local. I’ve been using that on our social media just to reiterate that we have local sourced coffee and honey for our menu items,” said Julia Belair, general manager of the new Bada Bean Coffee House.
For James Cronin, owner of D’Alessio’s Wood-Fired Pizza, starting a business was not a brief process, but since its inception, he said he has seen it thrive with its approach using only fresh ingredients.
“This is a great honor and since we opened, we’ve tried to give as much to the community as much a possible. In the last year and half, we’ve been able to do that giving to everyone from churches to cleanup groups and homeless shelters and everything in between,” said Cronin.
Cronin said he started the permit process for his business in 2014 and it was completed in 2017, but the wait was worth it.