Business group is told to forget 15% tax cut Legislative leadership says it's impossible as loss of federal aid looms

October 11, 1995|By JOHN W. FRECE | JOHN W. FRECE,SUN STAFF

OCEAN CITY -- Legislative leaders bluntly told Maryland's business community yesterday that its proposal to cut personal income taxes by 15 percent over the next three years hasn't got a chance.

House Speaker Casper R. Taylor Jr., Senate President Thomas V. Mike Miller Jr. and Senate Minority Leader John A. Cade each told a Maryland Chamber of Commerce audience that the group's goal is -- in Mr. Miller's words -- "unrealistic."

A 15 percent cut "ain't going to work," Mr. Taylor flatly told business leaders gathered for the chamber's annual legislative conference.

"If we can get out of this four-year term with [a] 10 percent [cut,] I think the Chamber of Commerce should declare victory," said Mr. Cade, an Anne Arundel County Republican and influential member of the Senate's Budget and Taxation Committee.

Of four lawmakers invited to discuss the legislative session that begins in January, only House Minority Leader Robert H. Kittleman of Howard County saw the 15 percent goal as "do-able" in the near future.

None of the four suggested the chamber's longer range goal -- reducing the personal income tax rate by 25 percent -- was even possible. "Out of reach," said Mr. Cade.

Chamber leaders have made a sharp cut in personal income taxes the centerpiece of their legislative agenda for 1996, saying it would improve Maryland's ability to compete with Virginia, North Carolina and other states for job-creating businesses.

Gov. Parris N. Glendening has been talking about a smaller cut in the state tax rate, in the range of 5 percent to 10 percent.

Robert R. Neall, a former state delegate who now is the chamber's lead lobbyist, said he was not surprised at the legislators' initial reaction. He said it was up to business leaders to convince them of the necessity to cut taxes more deeply.

"You have to remember: We're looking at this through competitive glasses," he said of the Chamber of Commerce position. "We're trying to give them an assessment -- and not just in the tax area -- of what will restore Maryland's competitiveness."

In addition to a tax cut, chamber leaders said they intend to push legislation to streamline the business permit process; to prohibit state regulations from exceeding federal regulations; to lower real estate closing costs; to prohibit businesses from requiring union membership as a condition of employment; and to exempt certain manufacturing costs from the state sales tax.

Most of the discussion, however, was about income taxes. With the state facing the potential loss of millions of dollars in federal aid, the legislative leaders said a tax cut as deep as business wants isn't possible.

Mr. Miller, a Prince George's Democrat, said that while the state's personal income tax rate may be high, Maryland ranks favorably with other states in comparisons of overall tax burdens.

Mr. Cade added that Maryland's high personal income tax rate was no accident. Rather, he said, it was an intentional tax policy designed around the ability of Maryland's relatively high-income taxpayers to pay.

On a related tax issue, the presiding officers and Mr. Cade said they believe Mr. Glendening is making a mistake by ruling out any increase in transportation-related taxes such as the state gas tax.

The lawmakers said the state's Transportation Trust Fund soon will need an infusion of money if the state is to maintain and expand its road and bridge system and keep up with soaring mass transit costs.

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