Wednesday, January 3, 2018

New Laws Effective January 1 - Hot Issues Coming Up in The Next Legislative Session

Two New Laws In Effect January 1 2018
  • The Contraceptive Equity Act, prohibits insurers from charging co-payments for contraceptive drugs, procedures and devices approved by the federal government.  It also requires insurers to cover the cost of over-the-counter contraceptive medications, such as the morning after pill, and bars them from charging a co-payment for vasectomies.  It is one of the most comprehensive measures in the country addressing access to contraceptives. The bill is designed to provide more options for couples who need affordable birth control.
  • The Smoke-Alarm Law, was signed in 2013 but goes in effect on January 1st. It requires homeowners to replace 9-volt battery operated smoke detectors with newer models that lasts a decade. The legislation updated the state’s nearly 40-year-old law on fire protection.  The law calls for 10-year-old smoke detectors to be replaced. The date of manufacture, while sometimes hard to locate, should be printed on the back of smoke alarms. If no manufacture date is printed on your alarm, experts say it is likely outdated and should be replaced. The legislation does not affect homes with hard-wired smoke alarms.
Hot Issues Coming Up In Next Year’s Legislative Session

 Restoring highway user funds

          For many years municipalities have depended on state revenues that come from state highways go through municipalities.  There was formula that appropriated hundreds of thousands of dollars to our municipalities.  During the recession that revenue source was drastically cut and has never been fully restored.  In recent years municipalities have received grants as a substitute for the highway user revenue.  But the grants have not be at the same level and they are not something municipalities can depend on when they prepare their local budgets  One of our priorities will be to restore highway user funds with a formula that is equivalent to the former appropriation and dependable enough that municipalities can depend on the revenue source.

Lock box on Educational Funding

         Two members of the General Assembly, Delegate Maggie McIntosh and Senator Joan Carter Conway, plan to introduce a constitutional amendment that would put the state’s share of revenue from its casino gambling industry in a “lockbox” for public schools.   The amendment would ensure that gambling taxes are not used to finance the state’s K-12 educational funding formula but to enhance it. 

           Education aid in recent years has been nearly flat even as Maryland’s six casinos have prospered. Money from gambling taxes has flowed into the Education Trust Fund — but other money that was previous used for education has gone into the general fund. The casino revenue in effect has made it easier to maintain education spending required by state law, but the money unfortunately has not led to increased per-pupil funding for schools.

           Many people have told me: “‘What has happened to the gaming money?’” The legislation would put the amendment on the 2018 ballot for voters to decide.

          Aid to local governments for K-12 education is one of the largest components of Maryland’s $43 billion annual budget. In the current budget, Maryland is spending nearly $6.4 billion for that purpose.

           Maryland casinos generated $1.4 billion in revenue during the budget year that ended June 30. Of that, the casinos kept $814 million and paid the rest in taxes. The biggest beneficiary of those taxes was the Maryland Education Trust Fund with $451 million.   This is a good step to ensuring that the casino money goes to enhance the money needed for public education.

Some More of My Legislative Initiatives – Part 2

            Here are some more bills I will be introducing in the next session

1 - Advance Notice to Municipalities for Mosquito Spraying
This bill simply asks that the state and county notify municipalities twenty-four hours before there is any spraying for mosquito control so residents can be alerted to keep their pets and children inside when spraying is being done

2 - Advance Notice to Municipalities on Tree Cutting -

We are finding out that Pepco is removing instead of pruning large trees in our community despite local ordinances that protect our community’s large trees.  My bill would make Pepco notify a municipality that trees are going to be removed in their town on public or private property so the town can talk to residents about alternatives to tree cutting in order to protect the urban forest.

3 – Making Business Tax Credits More Effective

            Since I am on the Revenue Subcommittee of the Ways and Means Committee I spend a lot of time reviewing the state business tax credits.  There are over 10 tax credits with appropriations of over $100 million.  I have found that many of these tax credits are not effective and they are often mis-used by the people who receive the credits.  I plan in this year and future years to propose that we revise these credits to make them more effective or abolish them

            A – Stopping Double Dipping with Business Tax Credits 

            Believe it or not we have found out that some business is receiving two different tax credits for the same projects.  Business tax credits are fine if they actually used to hire more people, but a lot of companies just use the credits to enhance their profits and they actually aren’t an incentive to employ more people. The abuse of these tax credits has to stop.  My bill would prohibit ‘double-dipping.’

            B- Ensuring that Business Tax Credits Go to Small Businesses

            I have found that the big companies (Northrup Grumman, AstraZeneca, etc.) are taking a lion’s share of the tax credits and the small companies are only getting crumbs.  I will be introducing a bill that ensures that small companies get at least 25% of the Research and Development Tax Credit.  Hopefully if my colleagues go along with this I will in future years introduce similar legislation for the other business tax credit programs.
4 - Increasing Revenue - Closing Tax Loopholes

I continue to look at ways to raise money for schools, services and our roads and tax relief for senior who are on fixed income.  You can’t do all those things without raising money, so in the past and again this legislative session I will be introducing legislation that will attempt to raise money by closing corporate loopholes.  Two of these bills I also introduced last year.

            A – Closing the Carried Interest Loophole 

This is something that Donald Trump promised he would eliminate but was not included in the tax package that passed in Congress

Carried interest is a loophole in the tax code that allows the managers of hedge funds to pay a lower rate than most individuals.  A hedge fund manager usually takes 20 percent of all gains on the fund's investments.  The tax code treats that income as a "long-term capital gain," which is taxed at a lower rate than ordinary income (currently maximums of 20 percent versus 39.6 percent).

It really should be taxed at the normal rate 39.6% because it is not a capital gain (selling stocks, etc.  at a gain).  My bill (which is similar to other legislation introduced in New York, New Jersey, and Connecticut, and supported by the New York Times) would have these funds taxed at the normal rate 39.6% in Maryland until Congress moves ahead with plugging the loophole.  It would raise close to $30 million in extra revenue in Maryland.

           B – Closing the Nowhere Tax Loophole – The Throwback Rule

The ‘throwback’ rule is form of corporate taxation that could generate much-needed revenue for Maryland. In short, it is a taxation measure that twenty-five states have already adopted to ensure that corporations pay state income taxes on 100% of their profits; we want Maryland to join those states.

The complicated details have to do with how taxes are paid by companies that do business in more than one state. A corporation that is based in Maryland but that also does business in at least one other state does not pay Maryland corporate income tax on 100% of its income. Instead, according to a complex formulation, it is liable for taxes based on the percentage of income earned within the state. The other states where the corporation does business are entitled to require the corporation to pay income tax in their states in proportion to the amount of business the corporation does there. However, many states do not collect such taxes; the result is that large corporations in Maryland have “nowhere income” - income on which they do not pay tax in Maryland or in any other state.

The throwback rule is meant to eliminate this tax loophole, by allowing the home state of the corporation to collect income tax on the portion of corporate income that is currently “nowhere income” – it is “thrown back” to Maryland.
It is estimated that there are over 200 MD corporations that have over $5 billion in ‘” nowhere income” and closing this tax loophole would result in increased revenue of over $40 million for Maryland.

You can read more about the Throwback Rule by clicking:

5 - Changing Party Registration During Early Voting

As you may know, Maryland has closed primaries: you must declare your party affiliation in advance to be eligible to vote in that party’s primary. This means that independents don’t get to make their votes count in June, unless they change their registration at least a month ahead of time. I will be introducing legislation to enable independents to change their party during early voting so they can vote in the Democratic (or Republican) Primary.   I hope this will attract more people to come and vote.
Useful Information

Legislation that has been "pre-filed" for the 2018 legislative session can now be viewed online.  House bills are available here   and Senate bills here   .  Many legislators pre-file bills to get them into the public eye and, in some cases, get an earlier hearing date.

Before each legislative session, our non-partisan Department of Legislative Services releases issue papers exploring some of the topics that will come up during the 90 day session.  You can read the issue papers--or at least papers on the topics you are interested in here .          
Scholarship from our office are available for constituents living in District 47A, who are attending or will be attending a Maryland undergraduate, graduate, or professional school during school year 2017-2018. You can print out an application at my web-site www.jimmytarlau.olg or contact me at  and request one by email.  Or you may call my office at 301-858-3326 and leave your email address.  This year, my scholarship application is due Friday, April 15th.

            Delegate Diana Fennell and I were recently endorsed by the Maryland League of Conservation Voters.  We are proud of our environmental record.