The politics of tax cuts Glendening plan: Re-election gambit? Legislative revisions? Bigger cuts from GOP?

November 21, 1996

NOW THAT Gov. Parris N. Glendening has put a tax-cut plan on display, politics cannot be separated from government policy. Before it is over, what the governor outlined Tuesday -- a phased-in, 10-percent income-tax reduction -- will be dissected and reformulated. It could wind up much larger, much smaller or on the shelf. Mr. Glendening's announcement this week serves as a starting point, not the end result.

The governor joins House Speaker Casper R. Taylor in calling for a reduction in Maryland's 5 percent income-tax rate. Both leaders favor a lower rate to stimulate economic growth and improve the business climate. That is an important objective. But there is no consensus on how to do it or the proper size of a tax cut. There is an even bigger question about the affordability of such a proposal and whether the state might be better off putting this money into education and other high-priority programs.

William S. Ratchford II, the legislature's fiscal analyst, says there is a $750 million gap in Mr. Glendening's calculations. This will alarm key legislators. Meanwhile, Senate President Mike Miller, who represents a tobacco-growing area, opposes doubling the cigarette tax, a key element of the plan. And Mr. Taylor, a potential gubernatorial opponent in 1998, worries about the governor's failure to fix the state's long-term structural deficit. He wants to pay for an income-tax cut by expanding the sales tax to services as well as products.

Then there are complaints from Republicans, such as gubernatorial candidate Ellen Sauerbrey, who say the Democratic governor's plan is a political re-election ploy that is far too modest to be effective.

Advocates worry that Mr. Glendening's proposal could hurt social programs. Nearly $1 billion would have to be chopped to balance the budget over four years and finance a 10 percent income-tax reduction. There will be pain.

And finally, some legislators wonder if the state can afford a tax cut. Maryland's economy remains soft. A recession would knock the stuffings out of the governor's rosy fiscal forecast and throw the state deep into debt. Cutting taxes compounds the problem.

Mr. Glendening's plan guarantees center stage for tax-cut discussions at the General Assembly session. We expect lawmakers to ask hard questions about the financial underpinnings of any tax reduction and its affordability down the road. Everyone wants lower taxes, but not if it poses a future danger.

Pub Date: 11/21/96

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