Group says higher taxes for wealthy and closing `loopholes' could fix budget

Ehrlich dismisses plan by Progressive Maryland

January 15, 2003|By Tim Craig | Tim Craig,SUN STAFF

Hoping to shift the debate over how to balance the state budget, a liberal advocacy group released a plan yesterday to close the deficit without legalizing slot machines, cutting programs or raising taxes for most Maryland residents.

Progressive Maryland said the state can save $1.7 billion if lawmakers close tax "loopholes" and raise taxes for businesses and the wealthiest residents.

Several Democratic legislators -- including the House majority leader, Del. Kumar P. Barve of Montgomery County -- embraced the proposal, but Gov.-elect Robert L. Ehrlich Jr. immediately dismissed it.

The Republican also made clear that he does not plan to work with or take advice from Progressive Maryland, made up of dozens of community groups and 10,000 state residents interested in social justice.

"Progressive Maryland did not win the election. Period," Ehrlich said in response to a question about the organization's plan.

Progressive Maryland, based in Silver Spring, supported Democrat Kathleen Kennedy Townsend during the election. The biggest piece of the group's 13-point proposal calls for raising $650 million by expanding the sales tax to include business-to-business services such as management consulting and information technology services.

A second recommendation would raise $200 million by increasing the income tax rate on individuals who earn more than $100,000 a year and couples who earn at least $150,000 -- a move temporarily adopted in the early 1990s during Maryland's last budget crisis. People who earn more than $1 million a year would be subject to an additional 1 percent tax surcharge, which the group says would raise $70 million.

The rest of the proposal calls for raising almost a billion dollars by closing various "loopholes" that the group says benefit corporations and the wealthy.

In all, the group says the proposal would raise $1.7 billion -- about the amount of Maryland's shortfall for this year and next.

"I believe this report, although we may not follow it exactly, I believe and hope it will put away perpetuation of the myth that budget cuts and slots are the only way to balance the budget," said Del. Elizabeth Bobo, a Howard County Democrat.

Barve, the House majority leader, said the House leadership will seriously consider the proposal. "Devastating cuts and slots ought to be considered as a last option instead of a first option," Barve said.

Sean Dobson, deputy director of Progressive Maryland, pointed to a poll by The Sun last week that found that 68 percent of Maryland voters supported a temporary tax increase on people who earn more than $100,000.

The poll also found that voters do not want cuts to environmental programs or education.

But Ehrlich, who will release his budget proposal Friday, has refused to support tax increases to balance the budget.

Yesterday, Ehrlich -- who hopes to balance the budget by legalizing slot machines and cutting government -- said he was also skeptical of calls to close tax loopholes.

"`Loopholes' is a subjective term," Ehrlich said, adding that "one person's loophole is another person's thoughtful tax" policy.

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