Keeping tax-cut focus on jobs Reduce 5% rate: Taylor, Glendening pursue same route to improve state business climate.

February 09, 1997

STATE LEGISLATORS must make up their minds: Do they want to cut Maryland's income tax as a way of pleasing middle-class taxpayers, or is their purpose to spur job growth?

Gov. Parris N. Glendening and House Speaker Casper R. Taylor emphatically favor a jobs-oriented tax reduction. The key to Maryland's prosperity rests on attracting new companies and persuading in-state firms to expand here. But a high income-tax rate sends a red flag to business leaders to avoid Maryland.

Only by lowering the 5 percent income-tax rate can this state convince corporate America that Maryland is serious about improving its business climate. It is also a direct way to encourage the growth of small businesses -- the backbone of the economy.

At a hearing last week, administration officials supported Speaker Taylor's bill as well as their own. That was an encouraging signal. Blending the proposals would greatly enhance tax-cut prospects. Both bills "backfill" the $450 million annual revenue loss from a 10 percent income-tax cut by raising levies in other areas, such as tobacco and telecommunications. A combined Taylor-Glendening effort could produce sufficient funds to overcome any budget shortfall projected for future years.

There is some political pain involved in this trade-off, but it would be worth it if Maryland's reputation among corporate relocation experts improves. The heavy income-tax burden discourages firms from even considering Maryland on their "short list" of prospective location sites, and in-state companies often lose top-quality applicants -- or must boost their pay offers considerably -- because of Maryland's high-tax reputation.

Attempts by some legislators to turn the tax-cut bill into a giveaway for middle-class workers by increasing exemptions, not the tax rate, miss the point. This won't improve the business climate -- the prime objective.

As for Senate President Thomas V. Mike Miller's scheme to legalize slot machines at race tracks to pay for a tax cut, it is best forgotten. We are unalterably opposed to an expansion of gambling in Maryland. So is the governor. There isn't even a groundswell of support for Mr. Miller's plan within his own chamber.

Jobs remain the overriding reason for lowering Maryland's income tax rate. Yes, a 4.5 percent tax rate would reduce all workers' taxes. But more important, it would transform Maryland's image in the business community and provide small businesses with quick earnings boosts. Everyone would benefit.

Pub Date: 2/09/97

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