The More We Delay, the More We Pay The Power to Tax Is the Power to Build Our Future


April 02, 1991|By R. ROBERT LINOWES

There is never a good time to talk about taxes. GivenMaryland's softened economy and the current state budget deficit, the prospect of new taxes is neither popular nor promising.

Yet, a discussion about Maryland's tax system is very much in order. Our system is outmoded and outdated. Over time it has failed to keep pace with the changing nature of the state and the needs of all our citizens. It is not a fair system -- either in how it taxes, or in how the revenue is expended.

The Commission on State Taxes and Tax Structure was created in 1987 for the express purpose of finding ways to change and improve Maryland's tax system. Following three years of exhaustive work, the commission unanimously approved and sent to Governor Schaefer a comprehensive approach to restructuring the tax system. Its proposals were embodied in a legislation package sent to the General Assembly earlier this year.

The commission made one central recommendation: ''Maryland must be committed to the proposition that a fairer, more equitable tax system -- one that is truly focused on people rather than jurisdictions -- is crucial to the long-term social and economic well-being or every part of the state. It is necessary to ensure that the opportunities for a more uniform quality of life are available to each and every citizen.''

The power to tax is the power to build . . . to invest in our future . . . and to conserve the valuable assets which have been put in place over time. Taxation is destructive only when it fails to fulfill these purposes -- when the performance does not equal the promise. For some that comes in the form of paying more than they can afford. For others it means receiving less than they need regardless of what they can afford.

A close examination of Maryland's tax system suggests that it is both regressive and unresponsive. It places an unfair burden on those least capable of paying. For example, Maryland taxpayers in the $15,000-$20,000 bracket are paying 10.5 percent of their income in state taxes. By contrast, those earning over $50,000 pay 8.5 percent. As a percentage of their income, the majority of Marylanders are bearing a disproportionate share of the tax burden.

On the spending side, one-half of the state -- 11 counties, plus Baltimore city -- fell below the median in per-capita spending of state revenues. All these jurisdictions are hard pressed to meet acceptable standards in education, transportation, infrastructure and the provision of certain basic services, such as public health and public safety.

The persistence of fiscal weakness among half our jurisdictions will inevitably dull the luster of well-being among those believed to be stronger. Maryland can succeed in the new domestic and global competition only if every part of the state is in good working order.

Fixing the tax system is the first step in improving Maryland's capacity to meet its broadest obligations to new generations of Marylanders. The Tax Commission's recommendations never strayed from a fundamental principle: jurisdictions don't pay taxes -- people pay taxes.

In addition to a new system, the commission proposed an initial program of new taxes earmarked to help close the gap on basics -- education, transport and infrastructure -- for Maryland's poorer jurisdictions.

If implemented, some people would pay lower taxes, others more. All Maryland taxpayers will be taxed according to their ability to pay, and taxpayers in similar circumstances will be taxed similarly regardless of where they live. The new revenue would be split between state and county governments. Half of our jurisdictions would be brought up to the state median in per-capita revenue distribution.

The commission's proposals are conservative in nature. They seek to conserve Maryland's most valuable assets -- the preparedness of her work force, the viability of her transportation system, the workability of her infrastructure, and the quality of her environment.

Money per se won't solve all Maryland's problems. But we can't accomplish some things without it. That does mean some new taxes. A better tax system will ensure that the burdens are more fairly shared and that the benefits are more fairly distributed.

The chairman of the Senate Budget and Taxation Committee does not think the time is right to act on the commission's proposals. Citing a current annual study by the Corporation for Enterprise Development, Sen. Laurence Levitan, D-Montgomery, has concluded that our tax structure ''already is one of the best in the country.''

A close look at this report suggests that Maryland has little to brag about. It placed us 19th among all 50 states on its Tax and Fiscal Index -- and 34th in promoting equal fiscal capacity among local jurisdictions, particularly in state funding for education and general government operations.

It does not appear that Maryland will take command over her fiscal destiny any time soon. The General Assembly has already pushed the commission's proposals off for ''summer study.'' Compromise is always possible. Delay is probably inevitable. But the problems Maryland faces are inescapable. The longer we defer, the dearer the price.

R. Robert Linowes is a Montgomery County attorney and business man who chaired the Maryland Commission on State Taxes and Tax Structure.

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