When is a tax cut not a tax cut?

March 02, 1997|By Peter A. Jay

HAVRE DE GRACE -- March is here and, for better or worse, the winds are blowing.

Up in this corner of Maryland, warm south winds are drying out the fields. Tractors have emerged, pulling plows and harrows. Gulls follow the plows, looking for worms. At the edge of the woods the winds have blown dead leaves away and revealed thrusting daffodil shoots.

Tumultuous gusts of wind rattle the tin on shed roofs, and ruffle the surface of the great Susquehanna. Down beneath the whitecaps the water temperature is slowly rising, signaling fishy hormones that it's almost time to spawn. Deep in the Chesapeake Bay blue crabs are stirring in the mud where they wintered.

The winds are giving migrating geese and swans a mighty push toward the Canadian nesting grounds. They're scattering flocks of robins, and they're helping the Chesapeake-bound ospreys as they return, presumably tanned and rested, from a winter in the tropics. They're rattling nylon halyards against aluminum masts and fiberglass flagpoles, and they're making flags -- American, Maryland, maybe even the rebellious Stars and Bars -- snap, crackle and pop in the unseen torrent of moving air.

March winds seem to be blowing through Annapolis too, moaning outside the windows of the State House like a million angry voters, and thoroughly frightening the legislature huddled within.

The Democratic members especially, wild-eyed and panicky, are snatching up tax-reduction measures and clutching them to their breasts, much as Transylvanian peasants might cling to their garlic on nights when the vampires were thought to be abroad. It may not be much protection, but when you're desperate you have to rely on what you've got.

Born-again tax-cutters

And desperation is clearly what's driving most of the born-again tax-cutters. Their current proposal is too little -- a 10 percent income-tax reduction spread over three years, and festooned with offsetting tax increases which the authors hope nobody will notice -- and too late to provide much help for Maryland's languishing economy.

Like the governor, their independence from whom they are eager to demonstrate, the legislative Democrats think it's possible to offer an income-tax reduction with one hand, enact a tax increase with the other, and still win the childlike gratitude of a credulous public.

This can be accomplished, according to traditional tax-and-spend doctrine, as long as taxes aren't reduced enough to threaten any government programs popular with constituents, and as long as the new tax increases are carefully focused on groups that are comparatively small, reasonably prosperous, and -- if possible -- unpopular with the general public.

A new tax on lawyers would easily meet these requirements, but because the General Assembly is dominated by lawyers, that bird never flew. And a special tax on the news media, which the xTC public would no doubt applaud, would of course be found unconstitutional.

In the past, business usually made an excellent tax target -- and big business in particular seldom objected strenuously, both because it could use its tax payments to lever regulatory favors, and because it could always pass on the costs to the customers anyway.

Still, there is a point of no returns, and Maryland tax policy passed it. Businesses started leaving the state in droves. Republicans started getting elected. And Democrats decided it was no longer dangerous, and probably would be advantageous, to be identified as ''pro-business.'' That meant new tax targets were needed.

Governor Glendening, in propounding his own illusory ''tax cut'' proposal, thought he could have it paid for by cigarette smokers, whom presumably nobody likes. House Speaker Cas Taylor has a different idea. He wants to tax nerds and couch potatoes -- people who buy services such as Internet access and cable television. Other Democrats think the trick is to tax gambling, after first increasing opportunities for Marylanders to gamble.

In all the tax-cut frenzy, however, one theme has been astonishingly absent. It is that a significant cut in state tax rates, as opposed to sham cuts like those now being considered, could return Maryland to its old prosperity.

In the short run, it might force some shrinkage in the state government. But it would reverse the state's growing competitive disadvantage, stimulate investment, hiring and consumer spending, and soon bring about an increase in tax collections and an opportunity to improve and extend important state services.

But at this point, Maryland's Democratic governor, and the legislature's Democratic majority, don't really believe in tax cuts. They only believe in simulating them. And the Republican minority hasn't had the foresight, or perhaps the moxie, to unite behind a bold program of its own.

Serious tax reduction is coming, though. It'll get here, even if it takes another election. You can feel it in the wind, which is still picking up.

Peter A. Jay is a writer and farmer.

Pub Date: 3/02/97

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