Some free tax advice

May 31, 2002|By Kenneth R. Timmerman

MEMO TO Kathleen Kennedy Townsend and Robert L. Ehrlich Jr.

Re: Tax policy pitfalls

The toughest problem you will face as governor will be balancing the state budget. The fat times of big tax surpluses are over. But the wish list of new spending programs sought by advocacy groups and special interests continues to grow.

You have three choices, should you win the election in November. The option you choose will not only set the tone for your governorship, but ultimately, it will also determine your place -- if any -- in history.

Option 1: The status quo

You can continue the current tax-and-spend budget process, fighting each demand for increased spending and dying a death of 1,000 cuts.

Teachers unions and special interest groups will demand dramatic increases in school spending. Well-meaning parents will go along, sucked in by false claims that only "the children" will get fat on the pork.

Mass transit lobbyists will demand billions of dollars to build a new subway line to parallel the Capital Beltway, mandating Smart Growth and penalizing families who reject urban congestion in the suburbs. Environmentalists will demand you set aside huge sums to create new land trusts and impose crippling new regulations on private landowners and businesses.

Meanwhile, special interests with deep pockets and their lobbyists will carve out special exemptions and new stealth taxes, so only the meek and the poor will get stuck with the bill.

If you choose this road, you will face $1 billion deficits until the end of your term that can only lead to dramatic increases in state taxes. Don't expect the taxpayers to thank you for a lack of leadership at election time.

Option 2: A 15 percent income tax cut

Cutting taxes across the board has been a winning Republican position. Even Gov. Parris N. Glendening discovered that during his re-election campaign in 1998, stealing some thunder from Republicans by jumping onto the tax cut bandwagon.

Never mind that Mr. Glendening tried to welsh on his pledge to cut the state income tax rate by 10 percent during this year's General Assembly in Annapolis.

Cutting income tax rates is good policy. It allows working families to keep more of their hard-earned wages to invest or spend as they wish. As the Maryland Board of Revenue Estimates confirmed in a revenue projection chart for last year that was shown to a legislative committee in December 2000, it actually increases tax revenues by promoting growth.

But a big tax cut in the current economic slowdown will undoubtedly be painted as "risky" or "reckless," or worse, branded as an election year gimmick by revenue-hungry interest groups. It would take leadership to get these groups and their legislative supporters in line.

Option 3: A taxpayer bill of rights

There is a third, bolder option: running on a taxpayer bill of rights that would protect the taxpayers of Maryland, not set them up to be plucked like so many chickens.

Just like the first 10 amendments to our Constitution, a taxpayer bill of rights would establish clear principles that no future government -- starting with your own -- would be able to violate.

Such a document would enshrine these basic rights in our state constitution:

Taxes cannot be increased without a direct statewide vote of the people.

Government spending cannot grow faster than the sum of inflation and population growth.

Tax surpluses must be refunded to the taxpayers, unless the voters specifically vote to allow the state to keep them.

Sound like wishful thinking? Colorado passed a similar measure in 1992, and its economy boomed. Constitutional limits on the growth of government is good government policy. We can do it, too.

Let your opponents spend heavily to defeat this bill of rights. Let them argue that Maryland voters are incapable of deciding what's right for them.

Your position of respecting the sovereignty of the voters would resonate because it calls upon the most classic American values enshrined by the Founders in our Constitution.

Kenneth R. Timmerman is president of the Maryland Taxpayers Association.

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