Taxing Tax Issue

March 24, 1992

For a legislative body that has spent six months weighing a myriad of ways to erase the state's $1.2 billion deficit, the General Assembly is having one heck of a time coming up with an answer to the tax and spending-cut question. About the only thing that seems clear at this stage is that one way or another, Marylanders will be paying more out of their pockets to underwrite the cost of state and local government services.

That is unavoidable. The alternative, as Del. James Rosapepe of Prince George's County put it, is to make deep cuts in local school spending, police protection and health programs. Reducing the size of government can only be taken so far before budget cuts harm essential services. To their credit, state legislators have recognized Maryland has reached the point at which cuts must end and new revenue must be found to balance the budget.

Both the Senate and House have focused on $250 million in tax increases, but they arrive at that total quite differently. The Senate reaps most of its revenue by ending a slew of sales tax exemptions and extending the 5 percent sales tax to some repair services. Delegates, meanwhile, favor ending only a handful of exemptions and instead want to hike the top income-tax bracket to 6 percent for those earning over $100,000.

Neither chamber has fashioned a truly progressive tax package. These are politically tailored suits of armor, designed to appease powerful interest groups and to offend the fewest number of taxpayers. Thus, the House isn't even considering higher beer, wine and liquor taxes (its tax-writing Ways and Means Committee is headed by a liquor-store owner) and the Senate didn't make higher income taxes a part of its plan.

Most legislators seem intent on giving local governments increased tax powers. That is only fair, given the $250 million cut in local aid. But far more should be done to help the poorest counties that need direct subsidies to provide basic services.

We also agree with approval of a five-cent increase in the gasoline tax and a new tax on "gas guzzler" cars. This money would jump-start Maryland's road-construction industry and allow for crucial highway improvements, especially in congested areas. But a plan to have the state take over Washington-area bus and subway operating costs gives us concern: the state would pay all the bills but have little control over this excessively costly multi-jurisdictional operation.

The best features of these two tax packages, thrown together, would prove marginally acceptable. This still would not solve the long-term fiscal crisis. A huge "structural imbalance" in the state's revenue and spending picture would remain. Large deficits are likely to reappear quickly. But given the timidity of legislators to make fundamental changes in Maryland's tax policy, the proposals on the table mark a significant step forward.

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