BALTIMORE — Gov. Wes Moore’s tax reform plan that would raise hundreds of millions of dollars more from Maryland’s wealthiest earners does not go far enough to offset potentially “devastating” cuts to education, child care and other programs both now and in the future, a growing coalition of advocates and lawmakers said Wednesday.

For the second year in a row, legislation they’re introducing, called the Fair Share for Maryland Act, would offer a more aggressive approach — expanding corporate taxes in multiple ways, while hiking the highest income tax brackets even further in order to raise between $1.6 billion to $2 billion annually.

Designed to reverse some of the $2 billion in cuts Moore also proposed this year, proponents say it would help solve long-term funding issues associated with the Blueprint for Maryland’s Future education reform plan.

“We cannot afford to leave critical funding on the table,” said Riya Gupta, the interim executive director of Strong Schools Maryland, the largest advocacy group for the Blueprint.

Moore’s budget plan — introduced last week and now under review for the rest of the annual legislative session — borrowed significantly from the Fair Share bill in 2024 and, before that, years of similar proposals from more progressive lawmakers.

It aims to raise nearly $1 billion annually mostly from changes affecting individuals making at least $700,000. It would double the standard deduction and eliminate the ability for itemized deductions while consolidating lower personal income tax brackets and adding new higher levels.

Individuals earning at least $250,000 currently pay a maximum rate of 5.75%. Moore’s plan would require those making at least $500,000 to pay 6.25% and those making $1 million to pay 6.5%. Four out of every five Marylanders would see no changes or would pay less — with an average tax cut estimated at $173 for nearly two-thirds of all filers.

The framework is similar to last year’s version of the Fair Share plan, which Moore and Senate Democratic leadership rejected even as its proponents warned that the state would be forced to make deep cuts if it didn’t urgently address lagging revenues.

Now facing a $3 billion budget hole and looming cuts impacting education and other essential programs, Moore said he took advice from many groups and that he’s tried to make the best decision for each moment in time.

“Might I be so bold as to suggest that he may have taken a look at our bill from last year and gotten some of his revenue ideas from the Fair Share plan,” Sen. Shelly Hettleman, a Baltimore County Democrat who is her chamber’s prime sponsor of the legislation, said Wednesday.

Hettleman said the bill, like last year, would increase taxes for everyone making at least $250,000 while giving a break to lower earners by expanding the child tax credit and earned income tax credits.

“These elements will make our tax system fairer and ensure that each pays what he or she owes,” Hettleman said.

Del. Julie Palakovich Carr, a Montgomery County Democrat and lead sponsor in the House, said the tax cuts would apply to more than 1 million people. It would also fix “glaring problems in our tax code” mainly by changing a variety of ways corporations file their taxes, she said.

Though Moore’s proposal also supports some of those efforts, one major difference is in the two plans’ approach to a method called “combined reporting,” which targets what critics have long called a “loophole” allowing companies that operate in multiple states to avoid paying Maryland corporate taxes.

The governor’s version includes so-called “water’s edge combined reporting,” affecting only United States-based companies. Fair Share, mirroring its version from last year, would implement “worldwide combined reporting,” which would bring in companies that do business in Maryland but that are based in foreign countries.

Palakovich Carr said the move would “ensure that multinational corporations can’t shift their profits to offshore tax havens to avoid Maryland taxes.”

Business groups and Republican lawmakers — who say the state can focus on economic growth rather than tax policy to get through its budget issues — have pushed back on the plan.

“Mandatory worldwide combined reporting threatens to impose significant double taxation on non-U.S. companies, is inconsistent with state, federal and international tax norms, and violates principles of U.S. tax treaties,” the Maryland Chamber of Commerce, which is stepping up its lobbying and advocacy efforts this year, wrote in testimony on the idea of combined reporting in 2024.

Senate Minority Leader Steve Hershey, an Eastern Shore Republican, said last week that combined reporting was a “dangerous concern” that might not get over the finish line in the coming months.

“We have never been in favor of combined reporting,” Hershey said. “The bigger corporations will figure out a way to get around it. They will talk to their consultants and find out that they will not end up paying what I think the analysts believe that they’ll pay.”

Palakovich Carr said one of a few new elements to the Fair Share proposal this year will be a “business transportation fee” that is identical to one passed in New Jersey last year. Under that state’s law, a 2.5% surcharge is applied to corporate tax returns with a taxable net income over $10 million.

The idea is to target large businesses to help fund the state’s transportation budget, which is facing deep cuts that are separate from the looming $3 billion general fund shortfall.

Moore, for the first time this year, is also proposing to raise money for the transportation budget through a variety of vehicle-focused fees, including a new fee on online retail deliveries.

The governor has not said whether he would support additional tax proposals beyond what he introduced last week, but Democratic lawmakers have said they will continue to put forward their plans either way.

“It is early, but it does appear that there is an appetite to see other options and to have a larger menu on the table,” Palakovich Carr said.

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