By Glenn Rolfe

DOVER — Recognizing that working Delawareans and businesses deserve a break for their sacrifice during challenging times, Republican lawmakers are renewing their push to return surplus revenue to taxpayers.

Five GOP-sponsored bills calling for reductions in income, sales and realty transfer taxes, as well as changes to ease burdens on seniors and homebuyers, were addressed in a release by the House of Representatives’ Minority Caucus on Thursday — the day Democratic Gov. John Carney delivered his State of the State speech.

“We hope the majority would agree with us,” said House Minority Leader Rep. Danny Short, a Seaford Republican. “Our plan on the House side, and we’ll coordinate some with the Senate as well, is we’re going to roll out some of these initiatives on a weekly basis.”

The five pending bills — some introduced more than a year ago — are past due for consideration in the General Assembly, according to the GOP release.

Since the beginning of fiscal year 2022, on July 1, 2021, the state’s revenue forecasts have jumped dramatically. In the last six months, the nonpartisan Delaware Economic and Financial Advisory Council has twice boosted revenue projections for the current and upcoming fiscal years, increasing total income by $820 million.

And it is anticipated that this trend of more money will be continuing throughout 2022.

“It is an embarrassment that state government did not enact one meaningful tax cut last year,” said Republican Rep. Rich Collins of Millsboro, the author of a pending tax reduction, House Bill 191. “After the bills are paid and appropriate reserves are set aside, I believe government has a duty to return money to the people from which it was taken. That was an obligation the legislature failed to honor last year.”

HB 191 would:

• Make a 10% across-the-board cut to the state’s personal income tax rates.
• Reduce the corporate income tax by nearly 30%.
• Slash the gross receipts tax — sometimes referred to as Delaware’s hidden sales tax — by 50%.

According to the bill’s fiscal impact statement, the proposal would allow taxpayers to collectively retain more than $282 million in the upcoming fiscal year and more than $321 million in fiscal year 2024.

“This is an economic development bill,” Rep. Collins said. “In recent years, Delaware has had one of the worst economic growth rates in the nation. I believe allowing people and businesses to keep more of their own money will jump-start investment, increase employment and raise starting wages.”

HB 191 is pending action in the House Revenue & Finance Committee.

“Right now, we have over $800 million in excess, on top of the $2 billion we had in excess last year,” said Rep. Collins. “They raise taxes. You go back to 2007, all the different tax increases since that day — they just won’t give a dime back to the taxpayer. When they have hard times, they raise taxes. When we have good times, they don’t lower them.”

Yearick’s bills address realty transfer tax, tax credit

To benefit lower-income Delawareans, Republican Rep. Lyndon Yearick of Magnolia is sponsoring two bills.

HB 172 seeks to temporarily eliminate the state’s portion of the realty transfer tax for certain first-time homebuyers. It would apply to those with a gross income of less than $45,000 for single buyers or less than $75,000 in combined income for joint purchasers. To qualify, the purchase price of the home would need to be $250,000 or less. The bill will be amended to “sunset” or expire Dec. 31, 2024.

Ten lawmakers — nine Republicans and one Democrat — have thus far agreed to sponsor the bill. According to a fiscal note completed by the Office of the Controller General, it would return $1.6 million to beneficiaries annually.

Rep. Yearick’s second initiative, HB 158, would establish the Delaware resident low-income tax credit, which seeks to create a $500 credit for certain low-income Delawareans. In the case of spouses filing a joint return, the tax credit would be $1,000. Individuals earning between $18,000-$30,000 annually would qualify, as would spouses filing jointly with household incomes of between $36,000-$60,000. Additionally, a $110 personal tax credit currently available to some low-income Delawareans would be increased to $500.

Under the proposal, if the value of the credit exceeded the tax owed by the individual, he or she would receive the remaining value in the form of a tax refund.

Thus far, this bill has only attracted the sponsorship of Republican legislators. It would result in approximately $77 million remaining in the hands of modest-income Delawareans each year, according to the House Minority release.

“I am committed to supporting our working poor with my bills to reduce the realty tax, create a new tax credit and increase an existing personal tax credit,” Rep. Yearick said. “These proposals would provide needed relief to working individuals and families.”

Both of Rep. Yearick’s bills are pending action in the House Revenue & Finance Committee.

Seniors, homebuyers could benefit from HB 108, HB 71

When the state faced a budget deficit in 2017, legislators enacted laws increasing tax burdens on seniors and homebuyers. Rep. Mike Ramone, a Newark Republican, has introduced bills to repeal both statutes.

HB 108 would restore the senior real property tax credit to a maximum of $500. Five years ago, the credit was cut to $400. A fiscal note completed last year reveals that HB 108 would return more than $4.2 million annually to qualifying Delaware seniors. The measure has bipartisan support and has been pending action by the House Administration Committee for nearly a year.

Rep. Ramone’s second proposal, HB 71, would decrease the realty transfer tax in Delaware by 25%. In 2017, the tax was effectively raised from 3% of the purchase price of a property to 4% (local governments are responsible for three-eighths of this total, with the state accounting for the remainder). HB 71 would reset the state’s take to its pre-Aug. 1, 2017, level, restoring the effective combined realty transfer tax to 3%.

When fully implemented in fiscal year 2024, HB 71 would allow homebuyers to collectively keep an estimated $83 million. So far, only Republican legislators have sponsored this measure. The bill cleared the House Revenue & Finance Committee in June and is now awaiting the consideration of the House Appropriations Committee.

“These bills are two initiatives that I have been relentlessly fighting for over the past few years,” Rep. Ramone said. “Given the state’s extraordinary revenue forecasts, there should be no reason to delay implementation of either proposal.”

The Republican House Caucus said the first four bills have been improperly held in committee without a hearing for much longer than the 12 legislative days allowed under House rules. The fifth bill, HB 71, will surpass that threshold before the General Assembly recesses for budget hearings at the end of this month.

In response to the GOP release, Drew Volturo, communications director for the House Democratic Caucus, said its members had not seen the statement as of Friday afternoon and therefore could not comment.

Because these are all House bills, Scott Goss, the communications director for the Senate Democratic Majority Caucus, said its members would have no comment until the bills actually reach the Senate.

Reducing ‘tax bracket creep’

Not included in the release Thursday was another bill Rep. Collins is working on. It is HB 278, structured to prevent “tax bracket creep,” and it was introduced earlier this month.

“The bill requires the tax brackets to be adjusted for inflation. Now, the state would still get more money. If you made more money, you’d pay a higher tax, but your rate would not go up,” said Rep. Collins. “What it does is, we have all of this major inflation now. So if your income goes up 7%, but inflation went up 7%, you didn’t make any more money. You don’t have any ability to buy anything else. But if it pushes you across a tax bracket, you’re going to pay a higher tax rate.”

Rep. Collins said this proposal is most important for lower-income people. “The tax brackets in Delaware are $2,000, $5,000, $10,000, $15,000, $20,000 and $25,000, and the last one is the $60,000,” he said. “So those making between $2,000 and $25,000 are the ones that would really be benefited by this bill.”