Greg Anrig says that in some states, progressive leadership and grass-roots activism have turned crisis into opportunity for long-deferred tax reform:
In October 2007, two months before the onset of the worst U.S. recession since the Great Depression, Maryland’s Democratic governor, Martin O’Malley, convened a special session of his state’s Democrat-controlled General Assembly in a high-stakes effort to close an unexpectedly large $1.7 billion budgetary shortfall. A central component of O’Malley’s proposal was converting the state’s flat income tax of 4.75 percent to a progressive system with higher brackets of 6 percent and 6.5 percent for upper-income households. At the same time, he advocated a combination of tax hikes on corporate income, sales, tobacco, and vehicle titles, along with reductions in taxes on property and the incomes of lower earners.
The progressivity of O’Malley’s plan was somewhat weakened as the negotiating process unfolded, largely through the interventions of legislators representing Montgomery County and its influential minority of multimillionaires. Nonetheless, the final budget reduced income taxes for lower- and middle-income taxpayers while adding three new rates ranging from 5 percent to 5.5 percent on incomes from $150,000 to $1 million for single individuals and $200,000 to $1 million for married couples.
