Tax Revenues

BY TODAY'S end, the vast majority of Americans will have dutifully complied with the Internal Revenue Service's annual deadline for slogging through their tax calculations and mailing off their returns to the federal government, accompanied by payments of more of their hard-earned cash if necessary. But a rising share of taxpayers - one in five overall and almost one in three younger workers - now believe it's OK to cheat on their taxes, surveys show. Even more problematic, more corporations appear to be embracing much the same ethos: Their share of tax revenues keeps falling - by means legal, illegal and undetermined - with many firms paying little or nothing.

Gov. Robert L. Ehrlich Jr. wants voters to believe he turned a $4 billion deficit into a $2 billion surplus over the past four years. The argument can be made - but it requires a rather creative approach to bookkeeping. Unfortunately for Mayor Martin O'Malley, explaining the painful reality of state finances requires more than a 30-second TV ad. Admittedly, when Mr. Ehrlich took office in 2003, he confronted a significant shortfall, a billion-dollar gap between projected tax revenues and spending.

HOUSE SPEAKER Newt Gingrich and Eleanor Holmes Norton, the District of Columbia delegate in Congress, may be on to something that could help rescue troubled cities across the country, including Baltimore.Instead of throwing money at the crime, grime, failing schools and societal breakdown that sends urban residents fleeing to the suburbs, Capitol Hill's odd couple proposes a startling tax-forgiveness scheme designed to retain and attract the middle class.In the case of the District of Columbia, the Gingrich-Norton proposal would drop the federal tax rate to 15 percent, a huge potential break for citizens in the 28 percent bracket and higher.

ANNAPOLIS -- Maryland's unemployment rate soared to 6.8 percent in December from 6.1 percent in November, the state reported yesterday, as joblessness reached its highest level since 1983.The jobless rate in Baltimore increased to 10.2 percent from 9.5 percent the month before. It was the first time in a decade that the city's rate had broken into double digits."The mayor has been saying for some time that while everybody else is experiencing a recession, the nation's cities are experiencing a depression," said Clinton Coleman, Mayor Kurt L. Schmoke's press secretary.

Maryland's public university system has spent $25,000 this academic year to examine its own role in the economy -- and has declared that it is giving the state more than its money's worth.Taking fiscal 1992 as an example, the study found that the University of Maryland System's 11 degree-granting campuses and two research institutions generated $671 million in tax revenues while receiving $522 million in state support.In an average year, the university system returns about 28 percent more in state revenues than it absorbs, the study concluded.

Gov. William Donald Schaefer yesterday defended the state' controversial venture into keno gambling, calling it the only way to balance the budget at this time.Mr. Schaefer spoke on the same day that estimates were released showing tax receipts in Maryland moving up slightly for the first time in two years. This should mean that no further budget cutting will be needed in this fiscal year, which ends June 30, state officials said. But the additional income will not be enough or come soon enough to offset the need for gambling revenue.

Saying Baltimore faces hard financial times, Mayor Kurt L. Schmoke yesterday backed off from a campaign pledge to cut the property tax rate and warned that the city could be forced to lay off workers.Mr. Schmoke also said lower-than-expected tax revenues mean the city will not be able to give raises to its 26,400 workers at the beginning of the next fiscal year in July.In a stern call for austerity at the start of the new year, Mr. Schmoke said: "It's belt-tightening time. This is the most prudent course to take."

Reluctantly, grudgingly, more Maryland business leaders and legislators are beginning to accept the idea that the state might have to raise taxes.J. Glenn Beall, a former U.S. senator who now chairs a business coalition's fiscal policy committee, gave voice to that mood yesterday in his personal assessment of Maryland's budget problems."

The Sun's editorial ("A costly breakthrough," March 13) appears right on when it stated: "We cannot escape the fear that senators are seeking to raise more money than is truly necessary to make their [tax] plan work. " One only needs to look at the headlines of The Sun three days later ("Senate votes for tax on rich," March 16) to realize how prophetic the editorial was. The comments of elected officials are focused more on defending taxing the more affluent than the need for the revenue.

They may be quiet, but their numbers are growing.After a year dominated by the spirit of no new taxes and $1 billion worth of budget cuts, a number of state legislators are talking -- tentatively -- about something called "revenue enhancements."That means raising state taxes next year, allowing local governments to collect more taxes, or both.Even if the state manages its budget problems by cutting deeper rather than by raising taxes, some lawmakers say it's time to make Maryland's system of income, business, property and sales taxes more fair.