Finding a compromise on state tax relief General Assembly: Combining lower income, property taxes is best way to help taxpayers.

March 30, 1998

AS THE all-important budget conference committee gets to work in Annapolis, a paramount concern is the shape of this year's round of tax cuts.

We urge conferees to come up with a consensus plan that gives taxpayers a break without jeopardizing Maryland's future fiscal well-being.

It won't be easy. The Senate, with an eye on the election, wants to accelerate the 2 percent income-tax cut set for this year, giving voters a 5 percent reduction. That's a huge, and costly, increase.

The House takes a more cautious approach. It favors a combination of a smaller income-tax cut and a 5-cent reduction in the state property tax rate.

Both sides support a cash payout for the "working poor" through an earned income tax credit. That is certain to become law.

We favor the House's position because it gives the state flexibility to meet unforeseen economic downturns.

A smaller, permanent income-tax cut helps Marylanders without putting government in a hole should revenues fall short of projections. A property-tax cut also gives homeowners relief, but it is a one-time rebate: It can be extended, enlarged, reduced or eliminated in future years, depending on the state's financial condition.

That seems a far more prudent approach. Gov. Parris N. Glendening has expressed concerns about the Senate's rush to cut the income-tax rate so quickly. It could be a risky move.

Still, he resists embracing the House's temporary property-tax cut, in part because a Democratic primary foe, Harford County Executive Eileen M. Rehrmann, first proposed this tax reduction.

Yet that plan makes sense. It targets property owners of both businesses and residences for modest tax reductions, increases the amount of money flowing back to those who pay income taxes, helps the working poor and provides the governor and lawmakers with "wiggle room" in case of a falloff in revenues. It doesn't threaten to bankrupt the state.

Maryland taxpayers would win, but not at the cost of undermining state government's long-term financial stability.

Pub Date: 3/30/98

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