Tax-cut critics join to fight proposals Religious, elderly, labor lobby together

February 06, 1997|By C. Fraser Smith | C. Fraser Smith,SUN STAFF Sun staff writers Thomas W. Waldron and Michael Dresser contributed to this article.

As they seek support for their income tax-cutting proposals, Gov. Parris N. Glendening, House Speaker Casper R. Taylor Jr. and others face a sharply focused coalition of opponents who argue that a tax cut now would not be good for Maryland.

Labor leaders, senior citizen organizations and religious groups have formed a partnership to lobby against the cuts. The group is showering legislators with studies, statistics and a series of tax "facts, myths and realities." One of these:

"Myth: Marylanders are clamoring for a tax cut.

"Reality: Marylanders aren't that naive. They don't want to see their own families or others in the community suffer as a result. Support for a tax cut disappears when you start identifying specific spending cuts."

The critics include more than the usual group of professional advocates for the poor and liberal legislators.

Prestigious national authorities challenge the assertions that Maryland's current 5 percent rate keeps new business away and that an income tax cut would lead almost automatically to a better business climate.

A study released Jan. 7 by Dun & Bradstreet, a Wall Street bond rating and marketing information house, found that Maryland ranked 10th among the states in the battle to retain and attract jobs between 1991 and 1995.

And Alice M. Rivlin, a member of the Federal Reserve Board, testified in Annapolis last week that cutting taxes does not guarantee job creation. It is better to invest in technology, she said.

Even before that, the assertion that tax cuts would dramatically improve the state's recruitment of jobs and industry was met with skepticism by many in the General Assembly.

"I don't believe for a minute that jobs are going to be marching into this state if we cut taxes," said Sen. Jennie M. Forehand, a Montgomery County Democrat. "I think it's more important to have a good transportation system and good schools."

On the other end of the argument stands the Cato Institute of Washington, which joined with Maryland Business For Responsive Government this week in urging a 25 percent income tax cut. Cato scholars argued that only by acting boldly could Maryland remain competitive with surrounding states, many of which are cutting taxes.

Others worry that the proposed tax cuts are beyond the state's means.

A budget analysis given to legislators yesterday projects that in four years, the state would face a $512 million budget shortfall in its $8 billion general fund if Glendening's tax and spending packages were enacted.

Key legislators say they could find ways to make up for such a shortfall and still enact a tax cut, but there has been no consensus in the assembly on how to accomplish that.

"Everything is unfocused," said Sen. Barbara A. Hoffman, a Baltimore Democrat who is chairman of the Senate Budget Committee. "Everything is in flux."

The House Ways and Means Committee will hold the first hearing on the issue at 11 a.m. today.

Glendening and Taylor have called for a 10 percent cut in the tax rate, contending that new industry and new jobs will be attracted to the state if such a reduction is approved.

Others, including the House Republican leadership, have offered other forms of tax relief that would tailor the benefits to middle- and lower-income Marylanders.

Each proposal offers a different way to pay for the tax cut, including reductions in services and increases in other taxes.

Witnesses at today's hearing are likely to include the Partnership for Maryland's Future, the coalition of labor, religious and social-service groups.

"We're trying to walk a fine line," said Peter V. Berns, executive director of the Nonprofit Association of Maryland. "We're not against a tax cut per se. What we're opposed to is a tax cut that hurts services.

"The biggest issue is how a legislator's vote will play out in the election of 1998."

Because Republican Ellen R. Sauerbrey almost won the governor's race in 1994 after calling for a 24 percent income tax reduction, legislators aren't likely to be easily led to oppose a cut even if they doubt its premise.

With two months left in the assembly session, the maneuvering on the issue has just begun. Republican leaders, for example, are talking with Taylor in a effort to find common ground.

Pub Date: 2/06/97

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