Taxing dilemma in Annapolis Glendening-Taylor split: Two can't agree on ways to offset 10 percent income-tax cut.

March 03, 1997

CAN MARYLAND'S state government afford a 10 percent income-tax cut? That is the vexing question confronting leaders in the Annapolis State House. No one has yet come up with an approach that can win majority approval in the House and Senate.

Gov. Parris N. Glendening wants to double the tobacco tax, which has run into problems in both the House and Senate. House Speaker Casper R. Taylor's plan depends on a broad-based telecommunications tax that troubles the governor and is fiercely opposed by affected businesses. Senate President Thomas V. Mike Miller's plan relies on slot-machine gambling at race tracks, which the governor says he will veto. None of these proposals has widespread support.

The governor and Mr. Taylor tried to find common ground last week, but this fell apart when the House speaker mistook the governor's comments at a Wednesday meeting for full support of the Taylor proposal. That's not the case at all. So now the Taylor plan is back on the drawing boards, the Glendening plan is in limbo and the Miller plan waits in the wings in case a tax-cut bill ever gets to the Senate.

Complicating matters is a fundamental split between legislators favoring a lower tax rate to boost economic development and those favoring a tax cut for lower-income and middle-income citizens. Meanwhile, House Republicans have their own 6 percent tax cut and refuse to support any of the other proposals.

Legislative leaders need to keep two points firmly in mind. First, given the slow growth Maryland is experiencing, any tax cut this year ought to be aimed at promoting a better business climate and more jobs. That means lowering the state's 5 percent top rate. Second, any tax cut must be done responsibly, which means finding ways to reduce state spending as the principal offset. This won't be easy. It could mean settling for a smaller tax reduction.

An income-tax cut isn't worth it if it leads to years of deep deficits or major spending contractions in important programs. That's something lawmakers and the governor must not forget as they try to forge a consensus.

Pub Date: 3/03/97

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