Tax Structure

Constituents have spoken, and they haven't minced words on the topic of the almighty dollar, says Sen. Charles H. Smelser, D-Carroll, Frederick, Howard.A fiscal conservative by nature, Smelser's opinions on a controversial proposal to revamp Maryland's tax structure and generate additional revenue have been reinforced by numerous calls and letters to his office.R. Robert Linowes, chairman of the Maryland Commission on State Taxes and Tax Structure, told the Senate Budget and Taxation CommitteeWednesday that prompt action on the panel's recommendations -- regardless of the recession -- is essential for Maryland's economic health.

Judy Swann makes about $30,000 a year working in th medical department at the Baltimore Gas and Electric Co. office downtown. Four floors above her, George V. McGowan earns more than $440,000 as chief executive officer of Maryland's largest utility.A few blocks away, Connie Powell makes $18,730 a year as a computer operator for the State Highway Administration. At the top of the state's Department of Transportation, her new boss, O. James Lighthizer, makes more than five times that much.While these taxpayers are separated by job titles and plenty of dollars, they have at least one thing in common: They pay the same Maryland income tax rate.

The last time Maryland set out to make its tax system fairer, it created the "piggyback" tax -- the local income tax of up to 2.5 percent.This time around, tax reformers point to the piggyback tax as one of their biggest problems.While the tax was part of a 1967 plan intended to help equalize revenues among jurisdictions, critics say it now is the single greatest source of disparity in what local governments have to spend. It benefits high-income counties such as Montgomery, but it leaves Baltimore, with far more poor people and far fewer middle-income and upper-income residents, lagging behind.

ANNAPOLIS -- James T. Brady, managing partner at Arthur Andersen & Co., one of Baltimore's biggest accounting firms, was forced to dodge the horns of a tricky dilemma last week.As president of the Greater Baltimore Committee's public policy committee, he was on hand when the business group announced its support of the controversial Linowes commission proposals. The support was hailed, by the GBC among others, as courageous for a business group in light of the $800 million in new taxes the commission has proposed.

ANNAPOLIS -- The Maryland Retail Merchants Association became yesterday the latest business group to speak out on a controversial tax package that, among other things, would expand and raise the state sales tax.Not surprisingly, the group found no merit in that aspect of the package, named the Linowes report after its chairman, Montgomery County lawyer R. Robert Linowes. The report, which the Schaefer administration has decided to send to the General Assembly, would raise about $800 million in new taxes to help poorer jurisdictions around the state, as well as raise money for education and transportation.

Under gray, stormy clouds, William Donald Schaefer was sworn in yesterday for a second term as Maryland governor. It was a fitting portrait: In the face of bad economic news and war in the Persian Gulf, Mr. Schaefer's public mood was upbeat. Realistically upbeat. He intends to remain an activist chief executive.His immediate objectives are four-fold: comprehensive tax reform; statewide growth controls; crime prevention, and unifying Maryland. These he promised to accomplish while giving voters what they seemed to demand in November's elections -- better-run, lower-cost government with leaders willing to make tough decisions.

ANNAPOLIS -- Lawyers, doctors and accountants may not escape the larger sales tax net proposed by the Linowes tax commission, Lt. Governor Melvin A. Steinberg warned last night.While Mr. Steinberg said that Gov. William Donald Schaefer has yet to decide which of the commission's proposals to endorse, he told a state bar association dinner last night that lawyers and other professionals may not be exempted from a sales tax on their services, as the commission proposed."There is serious discussion taking place on whether or not we will go with the sales tax . . . and make it include lawyers," he told the group.

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."

No new taxes, State Sen. Charles H. Smelser, D-Carroll, Frederick, Howard, told farmers and business people Thursday morning."Right now, I'm not voting for any tax increase," he said at the monthly Agribusiness breakfast at Baugher's Restaurant.But other legislators probably will, he said."If I had to bet on it today, I'd bet there's going to be a gas tax increase," Smelser said in a briefing on the upcoming state legislative session.Smelser, a member of the Budget and Taxation Committee, said he's not too keen on a tax reform plan proposed by R. Robert Linowes, a Montgomery County lawyer who headed the governor's Commission on State Taxes and Tax Structure.

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.