Minimum wage increase bill passes House of Delegates
Wednesday, 12 March 2014 12:02

Estate tax relief bill also passes

by Bill Gates

    The effort to raise the minimum wage in Maryland cleared its first hurdle after the House of Delegates voted to approve the bill on Friday.
    The bill, which would raise Maryland’s minimum wage to $10.10 per hour,  passed the House by a vote of 89-46.
    Sixth District delegates John Olszewski Jr. and Michael Weir Jr. supported the bill. Del. Joseph “Sonny” Minnick opposed it.
    The bill (HB 295) now moves to the state Senate for approval.
    The Senate bill for raising the minimum wage (SB 331) is still before the Finance and Budget and Taxation committees.
    “It’s not a job-maker; it’s a job-killer for small businesses,” Minnick said. “If a small business has 10 employees, with four making minimum wage, those four will receive a 38 percent raise.

“The other six employees will ask for a 38 percent raise, and it will end up with two of the minimum wage employees getting laid off to give the others a raise.”
    The version of the bill  that passed the House left out what some believed was a key component: tying the future level of the minimum wage to inflation.
    That would have automaically increased the minimum wage as inflation rose.
    “I think that reflects a desire to let the phase-in take place and then see what the impacts are for workers and businesses,” Olszewski said. “We tried to strike a balance; to tie the minimum wage to inflation, and there was another economic collapse like we had recently, it wouldn’t be fair to businesses.”
    The increase in the minimum wage would be gradually phased in.
    It would rise to $8.20 per hour on January 1, 2015; $9.15  on January 1, 2016; and $10.10 in 2017.
    “People who work a full-time job should not be asked to live on $15,000 a year,” Olszewski said. “Twenty-one thousand a year is not that much better, but it’s an improvement.”
    The version of the bill passed by the House also froze the cash/wage rate for tipped workers.
    The original version of the bill called for tipped workers to be paid up to 70 percent of the official minimum wage (up from the current 50 percent).
    Instead, the passed version of the bill freezes the wage rate for tipped workers at $3.63 per hour.
    However, if a workers’ tips do not bring their earnings up to the current minimum wage, the employer is required to step in and make up the difference.
    In an editorial on Thursday, the Baltimore Sun called the employer requirement “all but unenforceable”  and said it may lead to tipped workers falling even further behind in wages.
    Olszewski defended the decision and said employers would make up the difference, and that states should not be taking the lead in raising the minimum wage.
    “For states to be put in the position of being forced to act shows no leadership from the federal government,” he said.
Estate tax relief?
    The House of Delegates also passed a bill that would raise Maryland’s estate tax exemption.
    The bill, HB 739, passed by a vote of 119-14.
    It will raise the state’s estate tax exemption by increments before coupling to the federal level in 2019.
    “Maryland is one of only two states which charges inheritance taxes and estate taxes,” Olszewski said. “We have approved a reduction of the estate tax.”
    Maryland’s estate tax is imposed — at rates up to 16 percent — on the transfer of property from the estate of the deceased, if the estate is worth $1 million for an individual or $2 million for a couple.
    The federal government only taxes estates worth over $5.34 million.
    “We want to keep the higher-earners in Maryland after they retire,” Olszewski said. “We want them to stay here and continue to pay taxes.”
    Critics of the bill say it will cost the state too much in lost tax revenue.
    “If retirees leave the state [to avoid the estate tax], we get no revenue from them whatsoever,” Olszewski said.
    The bill is now in the Senate, where it had its first reading in the Budget and Taxation committee on Monday.