Tale of Two Tax Plans

March 27, 1992

It won't be easy reconciling the House and Senate tax and spending plans in Annapolis. Though the two chambers approved general fund tax hikes of roughly $250 million, they arrived at that total in vastly different ways. A few crucial items were also added to the bill on the House side, further complicating an already complex undertaking.

Conferees owe it to Marylanders to devise a tax plan that is fair, equitable and spreads the burden among all those in a position to pay. This will require considerable flexibility.

The Senate should go along with the House proposal to add a new 6 percent bracket for taxable incomes over $100,000: It adds a bit of progressivity to the tax code. A House plan to increase the corporate income tax so businesses pay their fair share should win Senate approval, too.

But the Senate has the best argument on the sales tax question. Its bill expands the sales tax base to numerous repairs and services. The broader the application of the sales tax, the fairer the tax is for all citizens. House conferees should concede that point and adopt the Senate provisions.

We urge senators also to hold firm on a 50-percent tax hike for beer, wine and liquor: Some of these taxes haven't been raised in 50 years. A key House leader, Ways and Means Chairman Tyras Athey, is a liquor-store operator, a conflict of interest that apparently is swaying delegates. If cigarette taxes are to be raised, so should the tax on beer, wine and liquor.

At the same time, senators ought to agree with delegates and increase the gasoline tax by a nickel, to 23.5 cents a gallon. This would energize the construction industry and ensure continuation of highway improvements. A related surcharge on the sale of "gas guzzler" cars and a tax credit for "gas sippers" makes environmental and fiscal sense.

But the House-backed plan to let local subdivisions raise the piggyback income tax rate from 50 to 60 percent and impose a variety of other taxes gives us concern. It is a rich-counties proposal. The most affluent counties would reap huge windfalls while poor subdivisions would gain little. Unless a substantially enlarged aid program is adopted to help Maryland's poor subdivisions, this tax idea ought to be resisted.

We trust legislators can come up with a tax plan that balances the state budget while setting aside some "rainy day" money in case revenue forecasts once again fall short -- a distinct possibility.

That would also put conferees in a position to restore some of the money cut from vital social services, such as emergency assistance to avert evictions; the cost-effective WIC program for young mothers and infants; money to handle emergencies involving the developmentally disabled, and the important General Public Assistance program for the long-term disabled. These services make a big difference for the poor and needy. The General Assembly has an obligation to continue underwriting such worthwhile ventures.

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