Tax reform is the key to Baltimore's future

Dan J. Loden

January 15, 1992|By Dan J. Loden

THE FUTURE of Baltimore city is at stake. If lawmakers in Annapolis continue to treat Maryland as a commonwealth of small nations rather than one state joined by economic, social and moral bonds, Baltimore city faces a continuing decline in funds for education with no real hope of reducing its disastrously high property tax rate. Poor public education and high property taxes will further spur the flight of middle-class white and black families.

The danger lies in the fact that one measure that is likely to be considered as a "quick fix" for the state's current financial crisis is particularly bad for Baltimore city.

State Sen. Laurence Levitan is proposing that local governments be allowed to raise their share of "piggyback" income tax revenues from 50 percent to 60 percent. The current piggyback is grossly unfair because the money it raises goes back to the jurisdiction where income-earners live, not where they work.

Baltimore city provides the highest average salaries in the state. And for that reason 170,000 Maryland citizens work in the city but live in the surrounding counties.

The city projects that it will collect about $140 million from the piggyback tax this year, or about $190 per capita. Baltimore County expects $255 million from its share of income taxes, averaging just under $400 per county resident. Montgomery County is projected to collect $400 million in piggyback taxes, or nearly $530 for every man, woman and child in the county.

Fattening the current distribution will simply widen the inequities between the richer and poorer jurisdictions, particularly Baltimore city. It will mean the state writes off the need for tax reform that truly addresses the question of equal funding of education.

Baltimore is the economic engine that drives the state economy. Yet relatively little of the wealth it produces returns to the city.

Sen. John Pica is to require that part of the piggyback tax be returned to jurisdictions where the income was earned. The Greater Baltimore Committee has recommended that the piggyback tax revenues be frozen at current levels, and that any additional revenues created be applied in areas where the need is greatest. A better idea would be to kill the piggyback tax completely and use the funds to contribute to an overall statewide program for equal funding of education.

What Maryland really needs is a complete reform of its tax structure. If new taxes continue to be enacted solely on the basis of what will cause the least opposition in legislators' home districts, more ill-fitting appendages will be added to an already deformed tax structure.

Baltimore city cannot survive with under-funded education that turns out students unequipped for current and future job markets. It cannot survive with a property tax rate that is twice that of any other municipality in the state. If homeowner's flight from the city brings their numbers much below the current 35 percent, it will eventually require a state bailout of gigantic financial proportions to keep Baltimore afloat.

It is time for a do or die stand by the city delegation for tax justice. If this session turns out to be Baltimore city's Thermopylae, the plaque in their honor should at least read that they all fought with equal and utmost valor.

Dan. J. Loden writes from Baltimore.

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