Tax cut - Will GOP help

February 24, 1997

With six weeks to go in the Maryland General Assembly's 1997 session, the Democratic majority is still trying to find a way to pass a tax cut. It's not that they want to do it, but with an election year coming up, they dare not give Republicans an issue they can run with. We don't care why they cut taxes, just as long as they do.

We say that not because it would be of great benefit to the average taxpayers, who wouldn't get more than $200 if rates are cut by 10 percent. No, this tax cut is more symbol than substance, a message to prospective industries that to lure them here, the state is willing to sacrifice some revenues.

At this point the debate is about whether to reduce taxes by increasing the standard deduction - which would give everyone the same dollar amount - or by reducing the rate, which would mean that the more you make, the better the tax cut.

We favor the latter. If Maryland wants entrepreneurs to turn their high-tech ideas into manufacturing processes, it has to give those people who've risked a great deal already an incentive to stay in-state. Maryland has some world-class research facilities at some of its colleges and universities, but while having important research done here is a source of prestige, the state also needs the income derived from turning that research into new manufacturing companies.

The only question that remains then is how to fund a cut that would cost the state $300 million in revenues by the year 2000. The governor's proposal - doubling the cigarette tax - is not a reliable revenue source, since many may react by quitting altogether.

Much better is House Speaker Cas Taylor's plan to hike taxes on other services, including those provided by the telecommunications industry. Republicans oppose it, but plugging a $300 million hole without some new revenue source would be impossible. Taylor ought to tell them so, then ask them if they want to share credit for passing a tax cut, or be blamed for blocking one.

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