As I see it, the Linowes Commission proposals may be more tax-grab than tax equity.
The Linowes Commission proposals for restructuringMaryland's tax system have been called everything from a plan to construct tax equity to a thinly disguised tax-grab to generate $800 million in new revenue.
Gov. William Donald Schaefer is calling his Linowes legislative package "The Fair Tax Act of 1991."
But it is difficult to visualize as equitable a plan that relies almost totally on an increased sales tax -- from 5 percent to 5.5 percent -- imposed on cigarettes and many other now-exempt items, and a 2 percent annual tax on cars.
The sales tax changes would raise $514 million, and the 2 percent annual car tax would generate $374 million. Both taxes are regressive because poor people spend a proportionately larger part of their income on these items than do higher-income earners.
Indeed, Linowes does graduate the income tax, so that two-thirds of the people, those who earn under $40,000 a year, get a tax reduction up to $165. And yes, the Linowes plan does reduce property tax for all homeowners. In Carroll County that reduction would amount to 15 cents, lowering the property tax rate per $100 of assessed value from $2.35 to $2.20.
The money raised from the sales tax would be given to the counties for education, weighted to the counties that need it most to meet state average per-pupil expenditures.
Carroll would receive $590 in additional per-pupil money, to bring the county's annual per-pupil expenditures from $5,628 to $6,218. Altogether, Linowes would increase the average statewide per-pupil expenditure from $5,958 to $6,496.
The county also would receive $5.9 million to help solve traffic problems. This sum is in addition to the $187 million annually that would pay for state transportation projects, as a result of the adoption of the Linowes plan.
Of the $800 million in new revenue generated by Linowes, the state would receive $345 million in net new tax revenue, and the local governments will gain $462 million in net new tax revenue. Of that amount, Carroll County would receive $15.4 million.
It should be noted that Linowes would probably impact adversely on municipalities, of which Carroll has eight.
Part of the Linowes plan involves the elimination of six state tax and fee sources that are shared with local government. The commission recommended this to help defraya portion of the state cost of the new proposed aid to local government under the Linowes plan.
The shared revenues include the excisetax on cigarettes, liquor and beer, the net income tax on savings banks and savings and loan associations, corporate filing fees and proceeds from the sale of abandoned property.
The estimated local revenue for 1992 generated by these fees is $40.5 million. It is the $1.7million in revenue from the corporate filing fee that flows through to the municipalities.
The Linowes plan dismisses, in an almost offhand manner, the adverse impact on municipalities of the filing fee and other losses.
The Linowes report declares, "The effect of proposed changes on municipalities could not be calculated from availabledata." However, "the Commission believes that had it been possible to evaluate all recommended changes, they would result in revenue additions exceeding revenue losses for virtually every local government."
That's all well and good -- and as vague as it can be.
Where the municipalities are concerned, one thing seems apparent. The Linowes report, so highly touted as a three-year exhaustive study to make Maryland's taxes better-structured and more equitable, threatens to push municipalities back where they started with state revenues flowing to the cities through the counties, rather than directly to the cities.
As for Carroll, Linowes promises a 15-cent property tax rate decrease, $590 more in per-pupil spending and nearly $6 million to solve our local traffic problems.
All in all, many people believe the juice isn't worth the squeeze.
Let's face it, for all the goodies the Linowes plan offers, we should not lose sight of the fact that for most of us, Linowes means a tax increase, at worst, and a savingsof under $150 a year, at best.