Effort to add income tax brackets stalls in House
Legislation creating three new tax brackets from $125,000 and higher fails to make it out of committee.
The bill sponsored by State Rep. John Kowalko (D-Newark South) came up short in the House Revenue and Finance Committee by a 7-6 vote with two Democrats, Gerald Brady (D-Wilmington) and Krista Griffith (D-Hockessin) among the ‘no’s”
It would have created tax brackets at $125,000 with a rate of 7.1%, $250,000 with a rate of 7.85%, and at $500,000 with a rate of 8.6%.
Kowalko explains how it would have benefitted the state.
"It would establish a fairer and more equitable tax structure, it ensures a greater stability and sustainability to Delaware's primary revenue stream which is the personal income tax, provides a more stable structure when minor economic turbulences may disaffect the lower earners communities jobs," said Kowalko.
Kowalko adds it also would have funded state services more equitably.
State Rep. Mike Ramone (R-Middle Run Valley) voted against it.
"Simplifying the tax code is important and maybe having less brackets, but it's clearly going the wrong direction to add more brackets just to penalize the highest paying so we can get more out of them when we don't need it," said Ramone. "Why don't we give some of the 600 million back to the bottom ends of the bracket."
The bill also did not have the Carney administration's support. Department of Finance Secretary Richard Geisenberger explains why.
"House Bill 64 does raise tax rates at a time when, at least based on current DEFAC revenue forecasts, that additional revenue isn't needed," said Geisenberger. "Depending on behavioral impacts we can't say for certain whether in fact this bill will actually raise revenue or not, it could actually decrease revenue."
Geisenberger notes the legislation would make Delaware less competitive regionally, especially compared to Pennsylvania.