Income Tax Cut

Leaders of Baltimore-area counties, worried about losing millions in state aid to Gov. Parris N. Glendening's budget cuts, were relieved -- but cautious -- yesterday.The $14.7 billion state budget that the governor proposed Wednesday did not appear to contain the crippling cuts that they had feared. And with no proposed income tax cut, they expect more state money for education and school construction, the biggest areas of state largess to the counties.But details of the spending plan remained scarce.

An editorial in Saturday's editions incorrectly stated that Gov. Parris N. Glendening had favored an income tax cut during his 1994 campaign. In fact, he said he favored lowering business taxes.The Sun regrets the error.Pub Date: 9/24/96

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.

SUDDENLY, THE RUSH is on to embrace an income-tax cut for Marylanders. The state's business-development chief is leading the charge, along with the House speaker. The governor now says he wants to take a closer look at the options, and Baltimore's mayor says he is cautiously supportive.While these leaders aren't yet on the identical page, this time they seem to be reading from the same book.Momentum is building. The state's business community has turned the income-tax cut into an incessant mantra.

With Maryland enjoying a robust economy and a healthy budget surplus, a key senator is proposing that the state accelerate the income tax cut passed last year to give taxpayers quicker relief.Sen. Barbara A. Hoffman, chairman of the Senate Budget and Taxation Committee, said yesterday it might be fiscally feasible to reduce the phase-in period for the tax cut from five to three years."I really think a good use of that [state budget] surplus would be to accelerate the tax reduction to the citizens," said Hoffman, a Baltimore Democrat.

YOUR JAN. 26 editorial, "Income tax cut = jobs," attempts to rewrite the long Republican fight for an income tax cut for all Marylanders. Republicans have long believed Maryland is a tax hell, and that the income tax burden severely dampens the economy and kills job growth. We have consistently fought for a 24 percent income tax cut over four years.The first step is a 6 percent cut to increase the personal exemption from $1,200 to $2,200. A family of four could shield $8,800 of income from state tax, instead of the current $4,800.

Baltimore Mayor Kurt L. Schmoke voiced his qualified support yesterday for a state income tax cut.Schmoke said Maryland should reduce its income taxes to make the state more attractive to businesses seeking to relocate.But he said the reduction should be tied to a broadening of the 5 percent sales tax to include goods and services not covered, to offset any loss in revenue."All of us have been persuaded that there's a need for this income tax cut," the mayor said during his weekly news conference.

The governor wants to get to Income Tax Cut Heaven via Tobacco Road.The House speaker agrees on the destination, but wants to take a circuitous route through the Sales Tax Swamp.The Senate president says he's been down the governor's path too many times before, doesn't like alligators and isn't so sure he wouldn't rather stay put.That's the conundrum facing the General Assembly with five days down and 85 to go in the session. Legislators face the challenge of setting a course for Maryland's economic future at a time when the state's three most powerful political leaders are reading from radically different road maps.

House of Delegates leaders abandoned their proposed 10 percent cut in Maryland's income tax yesterday, settling on a less ambitious 7 percent reduction to be paid for entirely through budget cuts instead of other tax increases.The move is designed to win support from moderate-to-conservative Democrats who fear that any tax increase -- even if more than balanced out by the income tax cut -- would hurt their re-election chances in 1998.The new plan seemed likely to attract a considerable number of Republican votes.