Linowes plan pushed as tax reform Gain in resources, fairness stressed

November 29, 1990|By John W. Frece | John W. Frece,Annapolis Bureau of The Sun

ANNAPOLIS -- Members of the governor's tax commission said yesterday that they hope to sell their recommendations to a reluctant General Assembly and the public as tax relief, even though the proposals would raise $807 million in new tax revenue next year alone.

"I see this very much as a tax relief package for the average taxpayer," said Richard O. Berndt, a Baltimore lawyer and one of 17 members of the Commission on State Taxes and Tax Structure, which yesterday unanimously approved its final report.

Commission Chairman R. Robert Linowes and other panel members defended their thick sheaf of proposals, declaring they would make Maryland's system of taxation fairer while providing resources needed to improve and expand fundamental government services.

The bulk of the new money -- to be raised through a vast expansion of the state sales tax, an increase in personal and corporate income tax rates, and a new 2 percent personal property tax on motor vehicles and boats -- would go toward public school and transportation improvements across the state. Most of that money, in turn, would go to the state's poorest jurisdictions.

"I don't know how we could have been more responsive to taxpayers," said Mr. Berndt, noting that those who testified at the commission's public hearings complained mostly about the property tax system and their public schools.

"This gives them property tax relief in every jurisdiction in the state, and income tax relief for two-thirds of the people," he said. The other third, he said, could afford to pay the proposed higher taxes, because the commission's recommendations would tilt much of the state's tax burden from low- and middle-income earners to the wealthy.

Commission member Steven Muller, former president of the Johns Hopkins University, said, "The question is: If they don't like this, what do they like better? To say they want more services and lower taxes is lunacy."

With state money sent back to Baltimore and the 23 counties, all jurisdictions would be required to reduce property tax rates, at least in the first year. With the personal income tax made more progressive -- that is, by levying higher taxes on those who earn more -- two-thirds of the 2.1 million Marylanders who pay income taxes would actually pay less, the report concludes. And, with expansion of the sales tax base to cover currently untaxed services, millions could be raised for education.

Mr. Linowes, the Montgomery County lawyer who has guided the commission since it was created by Gov. William Donald Schaefer in late 1987, cautioned that the recommendations were interconnected and that they should be viewed and debated as a package, not piecemeal.

"I don't think the strengths or weaknesses of any of the proposals can be viewed out of context," he said.

He and other commission members said that they feared opponents would attack parts of the report --as some already have begun to do -- rather than looking at it overall.

"The fundamental fairness of this is already slipping away," warned Mr. Berndt, one of Governor Schaefer's closest allies on the commission.

What Mr. Schaefer will do with the recommendations is still unclear, although his aides say they expect him instinctively to embrace as many of the commission's recommendations as he thinks are politically practical, and possibly more.

For now, however, he is taking a cautious approach publicly, saying that he, legislators and the public must first read and digest the complicated report.

As a practical matter, Mr. Schaefer's aides say his priority now is finding ways to eliminate a deficit in the current year's budget and making final decisions on what to include in next year's budget.

"Until the review is done, and until the governor gets a final handle on the budget and priorities, it is simply too early to say," said Paul E. Schurick, the governor's press secretary.

Mr. Schaefer is under pressure from groups such as the Greater Baltimore Committee to use all his political power to push immediately for passage of the Linowes recommendations. Such groups are interested in the benefits Baltimore and other poorer subdivisions would derive from the recommendations and fear that an already bad economic and political climate could worsen as Mr. Schaefer's power wanes toward the end of his second and final term and make their passage more difficult.

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