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Forget slots

cut the rate

February 10, 1997

Is there anybody in Annapolis who doesn't have an idea on how to cut Maryland taxes?

Apparently not, judging by the way tax proposals are popping up in the state capital like dandelions in springtime. Sorting the best from all of them won't be easy, given the leadership's apparent reluctance to get behind one approach.

The worst of the bunch, in our view, would link slot machines for Maryland's horse tracks with a tax cut. It's a bad idea for two reasons: Gambling is an unreliable source of long-term cash and the proposal mixes up two complicated issues that need to be considered separately. With the governor on one side (against slots) and House Speaker Cas Taylor on the other, the approach promises a tug-of-war that may end in a draw, with neither side getting a tax cut.

Then there's the battle over whether the cut should be a cut in the tax rate or an increase in exemptions. Proponents of the latter approach say it would spread the benefits more equitably across all income levels, while the rate cut would be of greater benefit to those with the highest salaries.

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So far the exemption-vs.-rate cut debate has ignored the original thinking behind the tax-cut proposal: Maryland needs to take positive action to convince outside business prospects that this is a good place to locate. A proposal that spreads the benefits across all income levels may be more equitable, but increasing exemptions would not allow recruiters to tell executives with the power to make corporate-site decisions that "We've just cut personal income taxes by 10 percent."

More equality for those at all income levels will come as new businesses come and existing ones expand. Maybe that will happen without an income-tax cut; On Feb. 9 The Washington Post intervewed a smattering of economists who didn't agree that the rate cut would ease the state's job woes. Then again, if economists had all the answers, there wouldn't be a need for this debate. Forget slots and exemptions and just cut the rate.

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