Tax Structure

ANNAPOLIS -- After a meal of flounder, tortellini, asparagus and cake at the governor's mansion recently, a group of business leaders from across Maryland got the $800 million check: a pitch for the Linowes tax report from Gov. William Donald Schaefer."

The fate of Gov. Martin O'Malley's plan to overhaul Maryland's tax structure remained unclear yesterday after legislators held marathon hearings on his $1.1 billion package. Liberal groups, religious organizations, labor unions and others came out in force to support the plan, which they said would make Maryland's tax structure more progressive. O'Malley has proposed a series of increases, cuts and expansions to the sales, tobacco, income and property taxes. Small-business owners and their advocates were at least as vigorous in their arguments that the package would make Maryland less-competitive and hurt the economy.

When the real budget crunch comes - sometime soon - we may see a re-enactment of the "firefighters first" syndrome. The concept involves a kind of aggressive tutorial on what government does with your tax money. Here's how it works: You're a mayor or governor who needs to raise money to make the budget work. Knowing that no one wants to pay more taxes, you announce that matters are so dire that cuts will be made in the fire department. This gets people's attention. It suggests that taxes pay for essential services.

LAST MONDAY night, a thousand Baltimoreans crowded downtown Baltimore's War Memorial building to protest the multimillion-dollar budget cuts announced by Governor Schaefer. Witness after witness testified that programs being cut are those that rescue people from death, illness and despair. Their protest has been followed by daily and nightly demonstrations in Annapolis.But these state-level cuts are only the latest insults to a city that has undergone more than a decade of cuts in financial aid from the federal government.

REMEMBER THIS name: R. Robert Linowes. His Commission on State Taxes and Tax Structure has just produced the most controversial report to hit this state in recent times.Foes call it a ''tax-and-spend'' document. Mr. Linowes calls it a ''tax relief'' effort.Either way you look at it, the release of this report has propelled Mr. Linowes into a prominent state role, one that he is likely to occupy for a number of years to come.This influential and well-respected Montgomery County lawyer and civic activist has a daunting task in front of him: educating legislators and groups around the state to the complex details of his commission's report.

Dan Rodricks turned his editorial fire on me for standing up against income tax increases passed by the state Senate that would hit nearly all Marylanders in this sluggish economy ("Maybe Bobby Zirkin should be a Republican," March 20). Mr. Rodricks seems to believe that any Democrat who dares to speak against taxes or challenges party orthodoxy in any way is worthy of his scorn. Mr. Rodricks also apparently sees no problem with the type of divisive rhetoric that pits citizen versus citizen.

Momentum is building in Annapolis for a comprehensive overhaul of Maryland's revenue structure -- possibly including increases to some taxes and cuts to others -- as a way to boost state revenue and solve the state's long-term budget problems. Legislative leaders met yesterday with Gov.-elect Martin O'Malley in Annapolis to discuss an agenda for the coming year, and top Democrats in the General Assembly indicated beforehand that they believe the tax structure -- essentially unchanged since the 1960s despite attempts at reform -- needs to be altered to reflect shifts in the state's economy.

ANNAPOLIS -- First of all, Richard Dein wants to set the record straight. Boating is not yacht clubs, 42-foot sailboats and cabin cruisers. It's not fat cats and deep pockets. It's a 20-foot power boat, a fishing pole, a beer or two and a Sunday afternoon on the South River.But that garden-variety American dream is getting tougher and tougher for the little guy to afford, says Mr. Dein.Take beer, for instance. The price went up last week with the new federal excise tax. Gas has jumped to $1.30 a gallon, thanks to federal taxes and Iraqis.

WOULD-BE TAX-CUTTERS in Congress are currently engaged in an unfamiliar exercise. They are desperately trying to find fees they can raise or loopholes they can close so taxes they want to cut won't mean a net loss of revenue. But as The Sun's Julie Hirschfeld Davis reports, the most those cockeyed optimists think they might be able to produce in such "pay-fors" is $50 billion - nowhere near the extra $200 billion in taxes over 10 years some would like to cut. What's particularly illuminating - and galling - about watching the lawmakers sweat out trying to bring this relatively small feature of the budget into balance is that they have all but abandoned the cause of deficit reduction as a general proposition.

WHILE PARING $208 million from Maryland's budget, Gov. Robert L. Ehrlich Jr. has illustrated the limits of cutting as a solution to the state's long-term financial problem. The newest round of cuts, announced Wednesday, make it painfully clear that new or higher taxes must be part of the budget-balancing equation. Without more revenue, Maryland faces years of catastrophic deficits - $1.8 billion per year by 2007. Projected tax receipts are expected to be outpaced by built-in spending commitments for public schools, health care for the poor and other needs.