Rumors are circulating that Governor “my hands are tied” Carney will propose a budget on Thursday that will seek to close a $350 million budget gap by cutting state expenses by $175 million while raising $175 million in new revenue.
“New revenue” no doubt includes increases to “sin” taxes on cigarettes and liquor, because they always do. But $175 million in new revenue is probably too much to raise entirely on the backs of smokers. So it is possible that a tax increase on the state’s top earners ($60,000 and up) may be in the mix.
If Carney simply stays with the “new revenue” proposed in January by Jack Markell, he would overshoot the $175 million mark. Under Markell’s swansong budget proposal two thirds ($205 million) of the budget deficit would be addressed.
Itemized deductions on the personal income tax would be eliminated, though the standard deduction would be raised to 50 percent. That would raise $18.1 million.
The top personal income tax rate would rise from 6.6 percent to 6.8 percent, at $60,000. That would raise $9.9 million.
The corporate franchise tax, which businesses pay to incorporate in Delaware, would be raised to match inflation and a new top rate would be imposed: $250,000 for companies with $750 million or more in revenues or assets. Combined, that would raise $115 million.
The cigarette tax would grow from $1.60 a pack to $2.60 a pack, raising $18.6 million.
The state’s realty transfer tax would rise from 1.5 percent to 2.5 percent. That would bring in $44 million.
Carney has already telegraphed cuts to the pay and benefits of state workers, thereby keeping Markell’s disgust with the wealthy n’er do well bus drivers and park rangers alive.
Beyond that he has also indicated that good schools are an luxury from a bygone age. Is that enough to get to $175 million in cuts? Maybe.