Linowes defends his commission's tax proposals

December 14, 1990|By David Conn

The chairman of the Maryland Commission on Taxes and Tax Structure tried yesterday to deflect charges that now is not the right time to consider the commission's radical tax-restructuring proposals, in light of the state's growing economic and financial problems.

The commission's report would shift some of the burdens of taxation away from individuals and jurisdictions less able to pay, and in the process would raise more than $800 million in new taxes in the first year.

But Chairman R. Robert Linowes, a Montgomery County lawyer, while sensitive to the deepening recession in which the state appears to be mired, said the report should be considered apart from short-term economic concerns.

He also said the commission originally had planned to include law, accounting and other professions in the list of services on which a sales tax was proposed but dropped them because of the "mobile" nature of their businesses.

Until surrounding states agree on a tax on such services, Mr. Linowes said, local lawyers and accountants would suffer unfair competition from out-of-state professionals who easily could serve Maryland clients.

"It would not be administratively possible [to tax those services] until there was a similar tax imposed in the region," Mr. Linowes said.

The report, released last month by what has become known as the Linowes Commission, has come under fire from some Maryland legislators for including tax-increase proposals at a time of economic distress.

But Mr. Linowes, on the campaign trail for his report yesterday, told members of the Downtown Partnership for Baltimore, a business and government group, that the budget "developments do not change the state's need to bring about fundamental improvements" in the areas covered by the commission's proposals: education, transportation, infrastructure and the ability of local jurisdictions to provide basic government functions without unfairly taxing lower-income citizens while benefiting the wealthy.

"These are needs which transcend the economic cycle," Mr. Linowes said. "They deal with the future, and whether we have the common will to pursue the economic well-being of the state."

In response to a question about the decision not to propose taxing the services of lawyers, accountants and architects, Mr. Linowes explained that his group considered a sales tax on professional services. But "we determined not to attempt to impose [taxes] at this time on services that are easily mobile," he said.

Phil Dearborn, executive director of the commission, said that "maybe there is some mobility" in services such as credit reporting, which are on the proposed sales-tax list and are easily operated from anywhere in the country. But he noted that the dollar amounts involved in credit-reporting transactions are small compared with most commercial legal transactions.

Asked about the report's political prospects, Mr. Linowes declined to "prognosticate" but chastised legislators for what he called provincial thinking. Some have branded the report -- incorrectly, according to Mr. Linowes -- a bailout for Baltimore and other relatively poor jurisdictions.

"You simply cannot expect a state and its people to achieve these potentials if you think in narrow terms," he said. "The constituency is 5 million people [throughout Maryland], not a handful of lawmakers and local officials."

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