Tax Proposals

TRAVERSE CITY, Mich. -- Ford Motor Co. chief executive Alan R. Mulally expressed interest yesterday in 50-cent-per-gallon gasoline tax proposed by Rep. John D. Dingell, the Michigan Democrat who heads the House Energy and Commerce Committee. Mulally, speaking at the Management Briefing Seminars, said a gas tax would be a method to include consumer choice in the debate over how to improve fuel efficiency in the United States. "It's one way you can get at it," he said, referring to gasoline taxes in Europe that have raised fuel prices to $7, $8 or $9 a gallon.

Maryland legislators have begun discussing tax measures that could fund priorities such as transportation projects and help fill impending budget gaps, including a proposal to extend the sales tax to haircuts, business consulting, tax preparation, shoe repairs and other services. Although Gov. Martin O'Malley has said he wants to focus on streamlining government before considering any revenue measures, a House of Delegates committee will consider at a hearing today two bills to increase the sales tax to 5 1/2 percent or 6 percent, up from the current 5 percent, and to dedicate much of the new revenue to improving the state's mass transit system.

WASHINGTON -- Most Americans who have health insurance get it through their employers, in part because employers can take a tax deduction for premiums but most individuals can't. In proposing to change that system last night, President Bush drew support from free-market thinkers who believe the link between employment and health coverage encourages people to buy more expensive coverage than they need, since employers pick up most of the tab. Some analysts and advocacy groups, however, predicted that the plan would encourage employers to drop coverage and raise taxes for most people in the long run. They said the plan would benefit primarily the wealthy, who would pocket the biggest tax breaks, and the healthy, who can purchase individual coverage at a reasonable cost.

The Westminster city council proposed a 6-cent increase in the property tax rate - perhaps the largest such increase in the city's history - as part of a $27.2 million budget recommended for fiscal 2007 in a work session last night. With soaring costs for staff benefits and water treatment projects, the council recommended an increase in the property tax rate from 40 cents per $100 of assessed value to 46 cents. The city's last property tax rate increase was a 4.8-cent jump four years ago. Council members stressed that they want to enact a budget that avoids deficit spending.

Some senior citizens in Baltimore County would receive relief from rising property taxes under a proposal by two county lawmakers. The proposal calls for a tax credit worth $160 per house in the first year for county residents 65 or older who qualify for the state's homeowners property tax credit program. The credit, which would be indexed to increase with inflation, would be added to whatever county residents receive under the state program, which is limited to people with a household income of $60,000 or less and a net worth of $200,000 or less.

The leader of the Carroll County legislative delegation submitted a Senate bill yesterday to save taxpayers money by lowering the ceiling on the Homestead Tax Credit by 2 percentage points without consulting the county commissioners about the reduction's impact on the local budget. Angry and surprised, the commissioners said the reduction would lead to a budget deficit and delay many capital projects. "Homeowners need tax relief," said Sen. Larry E. Haines. "This bill will not amount to more than $2 million in relief.

There are no cows more sacred in the tax code than the deductions for mortgage interest and property taxes. Together, they add up to at least a $75 billion annual subsidy for housing and homeowners. President Bush, in establishing his advisory panel on tax reform, specifically asked the group to preserve support for homeownership. So it was quite a shock that the panel, in its final report, concluded that it had no choice but to significantly trim the home mortgage deduction and eliminate state and local tax deductions if it wanted to find a way to simplify the income tax. By combining that move with a variety of other measures, the panel was also able to bury the alternative minimum tax, a complex tax originally intended to prevent the wealthy from escaping taxes that is now starting to hit millions of otherwise ordinary upper-middle-class families who have a typical range of itemized deductions and personal exemptions.

WASHINGTON - In new political maneuvering over Social Security, a Democratic lawmaker will introduce a plan tomorrow for shoring up the finances of the retirement system, putting him at odds with leaders of his party. Rep. Robert Wexler of Florida says that by imposing a 6 percent tax on wages above $90,000, to be paid half by workers and half by employers, the government could raise enough money to solve Social Security's financial problems for 75 years. Workers and employers pay a combined 12.4 percent Social Security tax on wages up to $90,000 a year, but none on amounts above that.

IF YOU HAVEN'T heard the term "consumption tax" yet, you will. After winning re-election, President Bush said that he planned to reform two fundamental institutions of government: Social Security and the tax system. Just as talk of Social Security reform has put "private investment accounts" into the lexicon, tax reform will probably do the same for consumption tax. It might well be the centerpiece of a Bush tax-reform package. Now, the basic way Americans are taxed is on the amount they earn, their income.

Despite the support of Howard County's Republican Party, the petition drive to amend the County Charter to make it harder to increase taxes might be faltering, according to its chief organizer. "Honestly, there is a challenge to collect the remaining signatures," said James Oglethorpe, president of the Howard County Taxpayers Association, after learning that the County Council failed to approve the charter change Tuesday night - leaving his drive as the only way to put the issue on the November ballot.