CPR for the Linowes Recommendations


April 21, 1991|By BARRY RASCOVAR

From the start, the Linowes commission on tax reform has had one foot in the grave. That the General Assembly largely ignored its recommendations this past session is understandable. Now the question arises: How can the panel's work be salvaged?

Nothing has gone right for the commission, headed by Montgomery County lawyer R. Robert Linowes. Its charge from the governor was far too sweeping. Members from the legislature quit the group early-on. The late date set for the final report ensured defeat in the 1991 General Assembly. The 88-page bill was hastily drafted. Even its titled reeked of Schaeferesque propaganda -- "Tax Fairness Act of 1991."

Legislators were not about to consent meekly to an $800 million tax package. Not with angry shouts of voters still reverberating in their ears. And they certainly weren't about to become a rubber-stamp for Gov. William Donald Schaefer without dissecting details of this complex plan. Besides, few legislators were willing to trust Mr. Schaefer with an extra $345 million.

Yet there is still hope that the work of the commission will lead to something. What the panel discovered is hard for critics to refute. Maryland's tax system is unfair. It punishes the middle-class. It helps wealthy counties too much and deprives poor counties of crucial aid. The income tax is regressive, the sales tax a morass of loopholes.

Governor Schaefer proposed an unprecedented all-or-nothing tax overhaul. It included a 2 percent annual tax on cars and boats that had no political support. And it sought to raise both the sales and income taxes. It never had a chance.

Even worse, the commission gave no rationale for coming up with $800 million in new tax revenue. Why did state government need another $345 million? Why should schools receive $359 million? Why turn over $462 million to local governments? Why cut property taxes by $180 million?

Nor did anyone explain how the commission determined the state's future priorities without consulting legislators.

It is not surprising that critics accused the commission of shaping its recommendations to help Baltimore City. Mr. Schaefer spent 15 years as Baltimore mayor and was the foremost advocate of massive state aid for the city. According to the legislature's own analysis, the net effect of the tax changes would yield the city a whopping $124 million but cost Worcester County $2.6 million.

Legislators on the commission recognized back in 1988 where the commission was headed and made a quick exit. They didn't want to commit political hari-kari. The commission then failed to involve other legislators in their deliberations. The result was a cold shoulder when the Linowes report hit Annapolis.

The governor didn't help matters by studiously avoiding the issue of taxes in his reelection campaign. Thus he lost a chance to use the election as a referendum on the Linowes report. Instead, legislators came away from the fall elections convinced the message from voters was "no new taxes." This doomed the Linowes report.

A complex and controversial proposal often takes two or three years to clear the legislature. In the case of the Linowes report, the 1991 session hardly counts for much. It turned into a nasty war of words and inflammatory rhetoric. No one sat down and calmly analyzed the major parts of the commission report.

That is supposed to happen this summer. It isn't as difficult as it appears, as long as legislators avoid the traps that snared the Linowes panel.

First, though, legislators have to make some key decisions. What are the Assembly's top priorities? For instance, if the goal is a top-flight higher-education system, lawmakers have to determine what it will take in new dollars to make that happen. Only after setting dollar figures for its priorities can the legislature "reform" the tax system.

Three areas stand out as prime targets:

* The income tax. It bashes the middle-class far more than the affluent. There are thousands of ways to change this. The goal should be to tilt the income tax so the rich pay a larger proportionate share, even if it means a new bracket for upper-income residents. Lawmakers even could opt to keep the changes "revenue-neutral" and yet still achieve tax equity.

* The sales tax. There are so many exemptions that Maryland has one of the least efficient sales taxes in the country. Just closing loopholes (despite the inevitable clamor from special-interest groups) would raise enough to help the state's poorest subdivisions, not only the city but near-destitute counties in Western Maryland and on the Eastern Shore.

* The property tax. Any home owner can tell you the property tax process is needlessly complicated. Without raising any new taxes, legislators could simplify the procedure so it is easy for any home owner to compute what he or she owes. If legislators decide to raise new revenue via the sales tax or the income tax, they could become heroes back home by setting up a state aid plan to lower property taxes dramatically.

The Linowes commission report was a bust in the General Assembly this winter. Now lawmakers have a chance to design a revamped tax plan themselves. The odds of achieving meaningful changes are good -- if legislative leaders are seriously committed to making it happen.

Barry Rascovar is deputy editor of the editorial pages of The Sun.

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